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Big Tax Changes This Year!

The end of 2013 is approaching quickly and it is time to start thinking about taxes once again. Experienced tax preparers and Certified Public Accountants are gearing up for the upcoming tax season.

 

*For those of you tax payers who fall into the higher-income bracket, there is a new federal income tax rate of 39.6% on taxable income levels greater than $400,000, married filing jointly $450,000 and separately $225,000. In addition to the added tax rate, these taxpayers are subject to a new 20% maximum (up 5% from last year) on long-term capital gains and qualified dividends.

 

*Personal and dependency exemptions may be phased out and itemized deductions limited for those taxpayers with a gross income of more than $250,000, $300,000 for married folks filing jointly and $150,000 filing separately).

 

Now is the time to make an appointment with your tax preparer and evaluate the 2013 tax year. Will your income see two new Medicare tax increases this year? Have you taken full advantage of retirement savings plans? Traditional IRAs and 401(k)s provide the opportunity to contribute funds pretax to reduce your 2013 income. Funds contributed to Roth IRAs and Roth 401(k)s are contributions which are made tax free. If you haven't already maxed out your contributions, you will want to devise a plan to get as much as possible in before the end of the year. Retirement savings plans which include employer contributions will close at the end of the year while others will generally remain open until your tax return is due. Your CPA will help you work out a payment plan in order to take full advantage of these programs before their deadlines.

 

There are some key provisions which are due to expire to end this year. Plan accordingly with your Certified Public Accountant.

 

*The increased Internal Revenue Code Section 179 expense limits and provisions for 'bonus' depreciation will end this year.

 

*The 100% exclusion of capital gains earned from the sale or exchange of qualified small business stock will not apply to small business stock issued or acquired after the end of the 2013 tax year. Check with your CPA to make sure certain requirements qualify and are met.

 

*This is the last year to make qualified charitable distributions for up to $100,000 from an IRA directly to a charity if you are older than 70 1/2.

 

*Beginning in 2014, the above-the-line deductions for qualified higher education expenses will no longer be available. This includes the $250 out-of-pocket classroom expenses which were typically paid by education professionals.

 

* The 2013 tax year is also the last year that taxpayers can elect to deduct state and local sales in itemized deductions.

 

Take up your 2013 tax-year considerations with your Certified Public Accountant in order to maximize any return and minimize liabilities. Since some of these will take careful planning, the sooner you set up a meeting the better. Address any other concerns at this time as well.

 

It will be an interesting tax year with Healthcare a big concern for many. If you haven't found a program for yourself or your family, check with your CPA to find out how the tax penalty may affect your situation. Give your CPA a call today and set up an appointment to start your 2013 tax season off in the right direction.


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