the 7 horsemen of the 2013 tax-pocalypse
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There are 7 major tax changes coming in 2013. Almost every American taxpayer will be affected by at least one of these rules. GoodApril provides a quick summary of each of these major tax changes for 2013, including tax criteria, relevant thresholds, and basic details behind each. The seven rules covered include: - The Increase in the Employee Portion of the Social Security tax (FICA) - The New High Income Tax Bracket of 39.6% - The New 3.8% Net Investment Income Medicare Surtax - The Increase in the Capital Gains and Qualified Dividend Tax Rate - The creation of the 0.9% Medicare Surtax - The new Personal Exemption phaseout ("PEP") - The new Itemized Deduction phaseout ("Pease") Get your free Tax Checkup from http://www.goodapril.comTRANSCRIPT
The 7 Horsemen of the 2013
Tax-PocalypseWhy you’ll almost surely pay more taxes in 2013
(and how to prepare)
Payroll TaxThe 2009 Stimulus bill included a 2% reduction in the Social Security tax. It’s back in 2013, and impacts everyone who earns a wage - your paycheck is already smaller as a result.
Photo Credit: www.CourtneyCarmody.com via Flickr
Payroll Tax 2% increase in Social Security
tax on 1st $113,700 of income Maximum of $2,274 in additional
taxes, per spouse Tax is taken directly out of your
paycheck (not reported on 1040)
Photo Credit: www.CourtneyCarmody.com via Flickr
New Highest Tax RateThe Marginal Tax Rate on the highest earners has increased from 35% to 39.6% as a result of the new "Fiscal Cliff" tax rules.
Photo Credit: jypsygen via Flickr
New Highest Tax Rate Applies to single filers earning
over $400,000 and joint filers over $450,000
Increase in Marginal Tax Rate of 4.6% on income over the threshold above
Photo Credit: jypsygen via Flickr
Net Investment Income Surtax This new 3.8% surtax applies to "unearned income" (primarily interest, dividends, and capital gains) on higher earners. It’s part of the Patient Protection and Affordable Care Act (often called “Obamacare”).
Net Investment Income Surtax Income threshold of $200,000
(single) or $250,000 (joint) 3.8% tax on the lesser of:
Your Modified Adjusted Gross Income over the threshold
Your Net Investment Income (e.g. interest, dividends, capital gains)
Capital Gains Rate HikeThe tax rate on both Qualified Dividends and Long-term Capital Gains jumped from 15% to 20% as part of the "Fiscal Cliff" tax bill for the highest earners.
Photo Credit: gepiblu via Flickr
Capital Gains Rate Hike Applies to single filers earning
over $400,000 and joint filers over $450,000
5% in additional taxes on Capital Gains and Qualified Dividends
Photo Credit: gepiblu via Flickr
Medicare SurtaxThe Affordable Care Act (“Obamacare”) levies a new 0.9% increase in Medicare tax on higher earners.
Photo Credit: jypsygen via Flickr
Medicare Surtax 0.9% in new taxes on income
above the set threshold Income threshold of $200,000
(single) or $250,000 (joint)
Photo Credit: jypsygen via Flickr
Exemption Phaseout A less understood bit of the Fiscal Cliff tax bill, sometimes called “PEP,” is the gradual reduction in the value of each personal exemption a taxpayer receives if their income exceeds a threshold
Photo Credit: jeffsmallwood via Flickr
Exemption Phaseout Income threshold of $250,000
(single) or $300,000 (joint) Value of exemptions reduced by
2% for every $2,500 of income over the threshold
Photo Credit: jeffsmallwood via Flickr
Itemized Deduction Phaseout Sometimes called “Pease,” higher earners lose a growing percentage of the value of their itemized deductions as their income increases – it was introduced with the Fiscal Cliff tax rules
Photo Credit: lilife2012 via Flickr
Itemized Deduction Phaseout Income threshold of $250,000
(single) or $300,000 (joint) Itemized deductions reduced by
3% of the amount of your income above the threshold, up to a maximum of 80%
Photo Credit: lilife2012 via Flickr
Find out how you’re impacted, based on YOUR financial situation
Get a Free Tax Checkup
at www.goodapril.com
IRS Circular 230 Notice: GoodApril does not act as a tax attorney and does not provide legal advice. GoodApril's website and tools should not be treated as "covered opinions" under IRS Circular 230 and cannot be used for the purpose of avoiding penalties under the Internal Revenue Code.