[fname], below are several items that I want to make sure I pass along to you.

Tax changes included in Congress’ fiscal cliff legislation (01-01-2013)

Here is a summary of the provisions included in the bill, which the President is expected to sign.

Tax rates beginning January 1, 2013

A top rate of 39.6% (up from 35%) will be imposed on individuals making more than $400,000 a year, $425,000 for head of household, and $450,000 for married filing joint.

2% Social Security reduction for employees payroll is gone beginning 1/1/2013

AMT permanently patched

A permanent AMT patch, adjusted for inflation, will be made retroactive to 2012 but patched for 2012

Dividends and capital gains

The maximum capital gains tax will rise in 2013 from 15% to 20% for individuals taxed at the 39.6% rates (those making $400,000, $425,000, or $450,000 depending on filing status, as noted above).

Itemized deduction and personal exemption phase-outs

The Pease itemized deduction phase-out is reinstated, and personal exemption phase-out will be reinstated in 2013, but with different AGI starting thresholds (adjusted for inflation): $300,000 for married filing joint, $275,000 for head of household, and $250,000 for single.

Estate tax

The estate tax regime will continue to provide an inflation-adjusted $5 million exemption per person (effectively $10 million for married couples) but estates with values over this threshold will be taxed at a higher 40% rate (up from 35% in 2012).

Personal tax credits

The $1,000 Child Tax Credit, the enhanced Earned Income Tax Credit, and the enhanced American Opportunity Tax Credit will all be extended through 2017.

Other personal deductions and exclusions

The following deductions and exclusions are extended through 2013:

  • Discharge of qualified principal residence exclusion;
  • $250 above-the-line teacher deduction;
  • Mortgage insurance premiums treated as residence interest;
  • Deduction for state and local taxes;
  • Above-the-line deduction for tuition; and
  • IRA distribution straight-to-charity exclusion (plus special provisions allowing transfers made in January 2013 to be treated as made in 2012).

Business provisions

  • The Research Credit and the production tax credits, among others, will be extended through 2013;
  • 15-year depreciation and §179 expensing allowed on qualified real property through 2013;
  • Work Opportunity Credit extended through 2013;
  • Bonus depreciation extended through 2013; and
  • The §179 deduction limitation is $500,000 for 2012 and 2013.

.

Give my office a call at (714) 619-0667 and set a planning meeting.   Monica

 

Monica Rebella, CPA/IAR
Rebella
Accountancy
507 E. First Street #A
Tustin,CA 92780
ph (714) 619-0667
Fax (714) 544-0236
email: mrebella@rebellacpa.com



This document was not intended or written to be used, and it cannot be used, for the purpose of avoiding U.S. federal, state or local tax penalties.

 

CONFIDENTIALITY NOTICE-PRIVILEGED AND CONFIDENTIAL. This communication and any accompanying documents are confidential and privileged. They are intended for the sole use of the addressee. If you receive this transmission in error, you are advised that any disclosure, copying, distribution, or the taking of any action in reliance upon this communication is strictly prohibited. Moreover, any such disclosure shall not compromise or waive the attorney-client, accountant-client, or other privileges as to this communication or otherwise. If you have received this communication in error, please contact us by replying to this message and deleting it from your computer. Thank you.