Not a Myth- What’s New for 2013 Tax Filers

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.

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