2012
was a year of negation and election.
Many of us were watching and waiting for our congressional leaders to
come to agreement on the terms of our federal budget and especially changes that
would impact our tax liabilities in 2012 and future. Here are a few highlights on these changes
which will be important for you to consider for 2013:
- A 3.8% additional tax on the
lower of net investment income or
the amount of modified adjusted gross
income over the $250,000/$200,000 threshold. Net investment income includes,
interest, dividends, rents, and gains.
- Additional .9% Medicare Tax for
employees (not employers) on compensation over a $250,000/$200,000
threshold. Because the threshold amounts
are based on filing status and combined wages for a joint return, not all
employees will have the correct amount of withholdings.
- The top federal tax rate will return to 39.6% for a
married couple with in excess of $450,000 of income and a single taxpayer
with $400,000 of income.
- Capital gain rates will return to
20% based on a threshold again of $450,000/$400,000.
- Phase outs of personal exemptions
and itemized deductions will return for taxpayers over a threshold of
$300,000/$250,000 in income.
- The payroll tax holiday has
ended. Employees' FICA withholdings
will return to a 6.2% rate from the reduced 2012 rate of 4.2%.
- Personal tax credits including
the $1,000 child tax credit and advanced opportunity college tax credit
are extended.
- The elective contribution to a
401(K) plan has been increased to $17,500.
- The elective contribution to an
IRA account has been increased to $5,500.
Because
many of these came so late in the year, it will be critical in 2013 for all taxpayers to play an active
role in their tax planning during the year.
Follow our newsletters and blogs for the most up-to-date information and
as always, contact our office with questions and we will gladly assist you with
your tax planning:
