The tax code is ever evolving and 2013 will be no different for taxpayers. The following are some key facts and changes to the tax code for the upcoming year:
• There are seven income brackets; 10%, 15%, 25%, 28%, 33%, 35% and 39.6% individual tax rates for 2013.
• Standard deductions were increased to $12,200 for those married filing jointly, $8,950 for those filing as head of household, and $6,100 for those filing as single.
• The personal exemption amount has been raised to $3,900.
• The top estate tax rate is 40% with a estate tax exemption of $5.25 million.
• Section 179 deduction is up to $500,000 for capital assets acquired in 2013.
• 50% bonus depreciation is allowed for qualified assets placed in service through the end of 2013.
• An individual can contribute up to $17,500 to their 401(k) plan for 2013.
• The tax on capital gains and qualified dividends is 0% for those in the 15% income tax bracket or below, 15% for those in the 25%, 28% 33% and 35% income tax brackets and 20% for those in the 39.6% bracket.
• Required minimum distributions must begin in the year a participant turns 70 1/2.
• The IRA contribution limit increased to $5,500 or $6,500 if the participant is 50 or older.
• The social security taxable wage limit was increased to $113,700 this year from $110,100 for last year. Also changed, retirees under full retirement age now can earn up to $15,120 without losing benefits.
• The employee OASDI (Social Security) tax rate reverted back to 6.2%. Also, the OASDI tax rate under SECA (self-employment tax) reverted back to at 12.4% .
• Mileage rates for business and medical were increased to $0.565 and $0.24 respectively. The mileage rate for charity remains the same at $0.14.
For those of you who forgot a Valentine’s Day present for their significant other, I have taken care of it for you. I prepared a reference guide, the 2013 Tax Facts at a Glance, which highlights important tax rates and deductions for businesses and individuals. (If you want a laminated copy for your loved one, shoot me an email with your address and I can mail you one. I have about 50 leftovers.)
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