Posted Feb 24
Here’s a list of significant and/or interesting changes handed down by IRS. This is by no means a complete list. Please consult with your tax expert or at least Publication 17.
- Additional Medicare Tax– In a nutshell, an extra 0.9% on earned income exceeding $250k for couples, $200k for individuals.
- Net Investment Income Tax- 3.8% of net investment income or MAGI over $250k for a couple, $200k for individual filers. Tea Partiers went nuts over this but hey, should we tax poor working stiffs or passive (i.e. nonworking) income?
- Top tax rate is now 39.6%– Put the guns away. This applies only to taxable income over $450,000 for a couple. And is still a far cry from the highest historical marginal rates >90%. I only have two clients who are affected by this and I guarantee you it will not affect the kind of breakfast cereal they eat.
- Capital Gains & Dividends– for some folks the top rate will increase from 15 to 20%. Why isn’t this passive income taxed at the same rates as earned income???
- Medical Deductions- unless you or or spouse are 65 or older, the hurdle for deductibility is increased from 7.5 to 10%. But corporations, which the Supreme court has affirmed are people, can deduct every penny. I see.
- Yay, Person Exemptions!– increased to $3900, with exceptions.
- Itemized Deductions Restricted- if you make over $250k & are single & other details.
- Same Sex Couples– Can file as married if legally married in a state, even if no longer living there.
- FSAs– Can’t divert more than $2500/yr into these.
- Plug-in vehicle Credit expired in 2012, thankyou big oil.
- Home office deduction- simplified
- Standard Mileage Rate– 56 cents for business, 24 cents for medical care or moving.