IRS Provides List of 'Fiscal Cliff' Changes, Annual Adjustments

IRS Provides List of 'Fiscal Cliff' Changes, Annual Adjustments The Internal Revenue Service today updated its very helpful outline of annual inflation adjustments for tax year 2013, including tax rate schedules, and the tax changes mandated in the “fiscal cliff” legislation, the American Taxpayer Relief Act of 2012.
The standard deduction increases to $6,100 ($12,200 for married couples filing jointly), up from $5,950 ($11,900 for married couples filing jointly) for tax year 2012.
The “fiscal cliff” changes added a limitation for itemized deductions claimed on 2013 returns for individuals with incomes of $250,000 or more ($300,000 for married couples filing jointly).
The personal exemption rises to $3,900, up from the 2012 exemption of $3,800.
However, beginning in 2013, the exemption is subject to a phase-out that begins with adjusted gross incomes of $250,000 ($300,000 for married couples filing jointly). It phases out completely at $372,500 ($422,500 for married couples filing jointly.)
Here are other items on the IRS adjustments list:

  • Beginning in tax year 2013 (generally for tax returns filed in 2014), a new tax rate of 39.6 percent has been added for individuals whose income exceeds $400,000 ($450,000 for married taxpayers filing a joint return). The other marginal rates — 10, 15, 25, 28, 33 and 35 percent — remain the same as in prior years. The guidance contains the taxable income thresholds for each of the marginal rates.
  • The Alternative Minimum Tax exemption amount for tax year 2013 is $51,900 ($80,800, for married couples filing jointly), set by the American Taxpayer Relief Act of 2012, which indexes future amounts for inflation. The 2012 exemption amount was $50,600 ($78,750 for married couples filing jointly).
  • The maximum Earned Income Credit amount is $6,044 for taxpayers filing jointly who have 3 or more qualifying children, up from a total of $5,891 for tax year 2012.
  • Estates of decedents who die during 2013 have a basic exclusion amount of $5,250,000, up from a total of $5,120,000 for estates of decedents who died in 2012.

 

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