LinkedIn
YouTube
Facebook

Does the New Tax Law of January 2, 2013 Affect You?

Does the New Tax Law of January 2, 2013 Affect You?The new tax law of January 2, 2013 to avoid the “fiscal cliff” probably doesn’t have much effect on most middle-class Americans.   The law, dubbed “The American Taxpayer Relief Act of 2012,” really has no exciting provisions for most of us hard working Americans who make under $ 400,000 per year.

 Here’s a quick summary of the Major Provisions for Individuals:

  1. A top tax rate of 39.6% added for singles over $ 400,000 and married joint filers over $ 450,000.
  2. Adds a 3.8% Medicare surtax to investment income over these amounts and also a 20% capital gains top tax rate.
  3. Fixes the Alternative Minimum Tax with a permanent “patch” and raises the 2012 current exemptions to $ 50,600 single and $ 78,750 married.
  4. For 2013 reinstates the 2% Fica reduction of the last two years on a wage base of $ 113,700.
  5. Extends “family tax breaks” regarding the marriage penalty, the enhanced child tax credit, the expanded dependent care credit, the adoption tax credit and adoption assistance program exclusion, and the earned income credit.
  6. Extends the Tuition Deduction and the American Opportunity Tax Credit for five years.
  7. The Estate Tax Exemption remains at $ 5 million and will also remain unified with the gift tax system.  The top tax rate in 2013 rises to 40%.
  8. Extends the $ 250 deduction for classroom expenses for educators.
  9. And much more.  Go to IRS.gov to read the whole tax law.  In a coming blog post we will discuss Business provisions of the new law.

Leave a Reply

Copyright© 2012 Geraci & Co, Inc. All Rights Reserved