Now that you have filed your 2012 individual income tax returns, you need to be thinking about the changes that will be affecting your 2013 returns.
- Individuals who have earned income of more than $200,000 ($250,000 for joint filers) during 2013, will pay an additional 0.9% in Hospital Insurance (Medicare) tax.
- Individuals whose adjusted gross income exceeds $200,000 ($250,000 for joint filers) during 2013, whether from wages or otherwise, will also pay an additional 3.8% Medicare tax on net investment income (such as interest, dividends, rent, and passive income).
- Limits on medical deductions will be imposed in 2013 by raising the itemized medical expense floor for regular tax purposes from 7.5% to 10% for taxpayers under age 65. Taxpayers 65 and over will be subject to the 10% threshold in 2017.
- For individuals with taxable income over $400,000 ($450,000 for joint filers) during 2013, there is a new 39.6% tax rate.
- Personal exemptions and itemized deductions will start being phased out for singles with adjusted gross income over $250,000 ($300,000 for joint filers) during 2013.
- For individuals long-term capital gains and qualified dividends will be taxed at 20% to the extent 2013 taxable income exceeds $400,000 ($450,000 for joint filers). The 15% tax rate will continue for all others.
For more information, please contact us.