Tax Changes for 2013
12 Mar, 2014
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2013 is going to be a starting point of dramatic changes in taxation. Forget about higher earning households, there are many changes, which will effect any level of income tax payer. 1. We all enjoyed 2 years of Social Security 2% of reduction from 6.2% to 4.2% for 2011 and 2012. Starting 2013, we have started paying previous 6.2% Social Security Tax, employee’s portion. So, for each earned $1,000 an employee would not see $20 to the maximum of $2,274 per year per person or twice for married filing jointly and getting maximum of $113,700 per year each. 2. Tax Rates have been changed, see table below

Tax rate Single filers Married filing jointly or qualifying widow /widower Married filing separately Head of household
10% Up to $8,925 Up to $17,850 Up to $8,925 Up to $12,750
15% $8,926 to $36,250 $17,851 to $72,500 $8,926 to $36,250 $12,751 to $48,600
25% $36,251 to $87,850 $72,501 to $146,400 $36,251 to $73,200 $48,601 to $125,450
28% $87,851 to $183,250 $146,401 to $223,050 $73,201 to $111,525 $125,451 to $203,150
33% $183,251 to $398,350 $223,051 to $398,350 $111,526 to $199,175 $203,151 to $398,350
35% $398,351 to $400,000 $398,351 to $450,000 $199,176 to $225,000 $398,351 to $425,000
39.60% $400,001 or more $450,001 or more $225,001 or more $425,001 or more

If nothing else would be changed the taxpayer with the taxable base of $200,000 would be paying actually less in Federal Income tax for $397.25 than in 2012!!! Surprise, surprise… The kicker is, when you earn more than $400,000, you will pay for 4.60% for in Federal income tax. 3. Some other “who cares” adjustments for inflation: – exemptions increased for $100 to $3,900 – standard deductions increased for singles and married filing separately  to $6,100, for married filing jointly to $12,200 and for head-of-households to $8,950 – again, it is a great year to die from estate tax, since estate and gift tax exclusion increased to $5,250,000. 4. Bonus depreciation comes to the end at 12/31/2013, which was a great deduction for businesses. It was 50% on most of the purchases with limits of $500,000 on general purchases and $2,000,000 on capital ones. So, enjoy while you can during this tax season. 5. 179 depreciation restored to $25,000 starting 1/1/2014. Again, if you bought new asset in 2013, that’s your chance to write it off, see if it is worth it.6. Long-Term Capital Gain rate increased to 20% for those, who does $400,000 in income alone or $450,000 together, when files jointly.7. Earning more than $200,000 will trigger 0.9% additional Medicare Tax and for a couple it will be after $250,0008. If you have investment income and your AGI is $200,000 for singles and $250,000 for joint filers, you might get Medicare Tax on investment 3.8% on the overage of these thresholds. 9. Some other interesting change in Health and Medical Deductions on Schedule A. The threshold for that deduction increase to 10% of AGI. That’s punishment for those, who will not go on Taxzoom.com or not filing their income tax with knowledgeable income tax professionals. Others would have used Health Savings Accounts, getting health insurances via their sole-proprietor’s businesses and use other available and lawful tricks.