Happy New Year everyone! I hope your Christmas and New Years celebrations went well! We spent the holidays at home, and the kids enjoyed it very much. Then we spent New Years in Monterey/Pacific Grove, which was quite beautiful - sunny and a little bit cold! It was nice being next to the ocean. Well, Congress finally came to an agreement on the very last day of the year. Here is a summary of the new tax laws that affect us this tax season:
1. The federal estate tax, gift tax and the federal generations skipping transfer (GST) tax will continue to have $5,000,000 exemptions, indexed for inflation. The estate tax, gift tax, and GST tax exemption amounts were $5,120,000 for 2012. It is too early to know the level for 2013 because we will need to wait for the IRS to announce the inflation adjustment. The highest rate will go up from 35% to 40%. This is a permanent change to the law. Note: Technically there are multiple rates for estates under $5,000,000. This will not affect most people but it can affect non-resident aliens with significant assets in the US or people who are otherwise not entitled to the full estate tax exemption.
2. The income tax rates for 2013 are as follows:
Married Filing Joint Single
10% Bracket $0-17,400 $0-8700
15% Bracket $17,400-70,700 $8,700-35,350
25% Bracket $70,700-142,700 $35,350-85,650
28% Bracket $142,700-217,450 $86,650-178,650
33% Bracket $217,450-388,350 $178,650-388,350
35% Bracket $388,350-450,000 $388,350-400,000
39.6% Bracket $450,000 and up $400,000 and up
The change here was an increase in the top rate for married couples earning $450,000 or more and individuals earning $400,000. For Head of Household, I believe it is $425,000. It also appears that these amounts are indexed for inflation.
3. Payroll taxes will increase 6.2%, reverting back to the levels of 2010. This is the biggest hit for us all, as we will see less in our paychecks!
4. There will also be a phaseout of personal exemptions for individuals earning more than $250,000 and couples earning more than $300,000. Head of Household limit is $275,000. This also appears to be indexed for inflation.
5. Permanently indexes Alternative Minimum Tax (AMT) for inflation.
6. Capital Gains tax rates for 2013 go from 15% to 20% for individuals earning more than $400,000 and couples earning $450,000 or more. It will stay at 15% for everyone else.
7. Extension for 5 years of the Child Tax Credit and $2500 for college tuition.
8. Extension for one year of the accelerated "bonus" depreciation on business investments.
9. Extension of tax free distributions from IRAs for charitable purposes.
I will keep you up- to-date on any other changes in the tax laws.
Call soon for an appointment, and let's gear up to get your refunds as quickly as possible!
Might want to re-do the formatting on this post. It is not showing up and when you highlight over to read...it is quite small.
ReplyDelete