Must-Know Changes for Inclusion in Tax Planning for 2013

March 18, 2013

In the face of the tax deal, which was implemented to end the 2012 fiscal impasse, taxpayers must adopt certain changes in their tax planning. Otherwise, taxpayers will find themselves coming up short and, consequently, at risk for running afoul with the Internal Revenue Service – and we all know how that will cost you in time, energy and money. Many of these tax reforms can be explained by the best Rochester CPA in ways that can be understood by the layman. But it still pays to be aware of the basics especially in terms of their impact on your Rochester taxes – inclusions, deductions and computations, for example. Here are a few things to be aware of during tax planning amid the reforms.

Tax Bracket Changes

High-income households with yearly incomes more than $400,000 for single taxpayers and $450,000 for married couples filing joint returns will experience an increase in their tax bracket from 35% to 39.6%. This is aside from the 20% capital gains tax, which increased by 5% from its 15% rate, and the 3.8% brought by the so-called ObamaCare law. Since these tax increases only seem to apply to the top income earners in the country, President Obama declared that these changes will not affect 98% of the American population. Thus, if you belong to this category, you must consult with the best Rochester accounting firm to determine the actual amount payable to the government under the new tax scheme.

Personal Exemption Phase-out

Single individuals and married couples must also consider the effect of the personal exemption phase-out on their tax planning results. The best Rochester CPA can provide expert assistance on this matter but you should know that the personal exemption phase-out starts at: • $300,000 for joint filers; • $275,000 for heads of household; and • $250,000 for single filers. The implication: If you fall into one of these categories, you will not be allowed to claim all of your itemized deductions while your personal exemptions will be reduced. Your Rochester accountant will provide expert assistance on the itemized deductions that will best suit your tax goals for the year so don’t be shy about tapping his services on the matter. Other pieces of must-know information include these: (The increases are from 2012 to 2013) • Increase in personal exemptions from $3,800 to $3,900 • Increase in Earned Income Tax credit from $5,891 to $6,044 applicable for taxpayers with three or more children • Increase in the Alternative Minimum Tax (AMT) exemption from $50,600 to $78,750 for singles and from $78,750 to $80,800 for married couples. Future amounts have been indexed for inflation under the American tax Relief Act Yes, these changes necessitate a few radical changes toward tax planning but it should not be too big an issue with the expert assistance of the professionals from the best Rochester consulting – Rizzo DiGiacco Hern & Baniewicz, of course! Many other changes are in store for 2013 where taxpayers are concerned. The failure to make changes in your tax planning approach will work to your detriment so start discussing these changes with your accountant before the April taxes mad rush begins. It’s never too late or too early when it comes to these things.

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