Checklist for the potential tax changes in 2013
New ObamaCare taxes listed that kick in New Year's Day
Monday, December 31, 2012 4:53 AM
Here's a checklist for the potential 2013 tax changes - money out of your pocket:
Expiration of Payroll Tax Holiday - An additional 2 percent tax on wages and self-employment income on earnings up to $113,700.
Additional Medicare Tax - An additional 0.9 percent tax on wages and in excess of $200,000 ($250,000 combined on a joint return, $125,000 for married taxpayers filing separate returns).
Medicare Contribution Tax on Net Investment Income - An additional 3.8% tax on lesser of; 1) net investment income (net income on interest, dividends, capital gains, and the like) or 2) income in excess of $200,000 ($250,000 combined on a joint return, $125,000 for married taxpayers filing separate returns). Capital gain that may be excluded from income tax on sales of personal residences will not be subject to this tax.
Long-Term Capital Gains - The top rate goes from 15 percent to 20 percent. Coupled with the Medicare tax on investment income, long-term rates will increase to nearly 24 percent for those in the highest income tax brackets.
Qualified Dividends - The top rate went 15 percent to 39.6 percent for those in the highest income tax brackets. Coupled with the Medicare tax on investment income, rates will increase to more than 43 percent for those in the highest brackets.
Expiration of the so-called "Bush Tax Cuts" on Individual Income Taxes - The current income tax rates ranging from 10 percent to 35 percent increased to rates ranging from 15 percent to 39.6 percent. The increased rates might not result in additional income tax for certain taxpayers subject to the Alternative Minimum Tax (AMT), as the additional tax from the increased rates might, in certain instances, be accompanied by an offsetting decrease in AMT.
The checklist was compiled by David A. Shuster, JD, LLM, a tax principal and director of tax controversy services at Grassi & Co., in New York City and Jericho, N.Y., as reported by thenonprofittimes.com, a leading business publication for nonprofit management.
ObamaCare taxes that kick in New Year's Day
Five new taxes kick in on New Year's Day when we start paying for ObamaCare, as reported by The New York Post:
A 3.8 percent surtax on investment income for individuals making more than $200,000 or married couples above $250,000.
A first-ever cap on the amount that the 24 million Americans with Flexible Spending Accounts for medical expenses can contribute. In January, contributions to the tax-free accounts are limited to $2,500.
An increase in the medical-deductions threshold.
An additional Medicare payroll tax of 0.9 percent on wage income above $200,000 for an individual or $250,000 for couples.
A 2.3 percent sales tax on medical devices used by hospitals.