Thursday, July 11, 2013

Upcoming Tax Changes for Tax Year 2013



There are a number of changes to the tax structure that became effective in 2013.  Some of these are already affecting our paychecks while others wait quietly for us to prepare and file our returns early next year.  Some of the changes and who they affect include:
  • 0.9% Medicare surtax on earned income
    • Individuals and Heads of Household with more than $200K in earnings
    • Married couples filing jointly with more than $250K in earnings 
    • Married filing separately with more than $125K in earnings
  • 3.8% Medicare surtax on net investment income
    • Individuals and Heads of Household with more than $200K in modified adjusted gross income
    • Married couples filing jointly with more than $250K in earnings adjusted gross income
    • Married filing separately with more than $125K in earnings adjusted gross income
  • Estate and gift tax exemption goes up to $5.25K and the tax rate increases to 40%.  The annual exemption per receiving individual increases to $14K.
  • 39.6% tax rate applies to the following "high-income" earners
    • Individuals - $425K
    • Heads of Household - $425K
    • Married Filing Jointly - $450K
  • Standard deductions are increasing
    • Individuals - $6.1K which increases to $7.6K once 65 years old
    • Heads of Household - $8.95K which increases to $10.45K once 65 years old
    • Married Filing Jointly - $12.2K.  If a single spouse is 65 or older it increases to $13.4K.  If both are 65 or older it is $14.6K.
  • High income earners lose 3% of write-offs on the amount of their Adjusted Gross Income greater than:
    • Individuals - greater than $250K
    • Heads of Household - greater than $275K
    • Married Filing Jointly - greater than $300K
    • The reduction in write-off cannot exceed 80% of the itemizations
  • The tax rate for capital gains and dividends increases to 20% for high income earners
    • Individuals with taxable income over $400K
    • Married with taxable income of $450K
  • Alternative Minimum Tax Exemptions increase
    • Individuals - $51.9K
    • Heads of Household - $51.9K
    • Married - $80.8K
  • Basic Medicare Part B Premium is increasing to $104.90/mo

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