{"id":445,"date":"2013-01-03T23:37:53","date_gmt":"2013-01-03T23:37:53","guid":{"rendered":"http:\/\/old.sommers-taxapedia.com\/archives\/?p=445"},"modified":"2013-05-12T00:47:15","modified_gmt":"2013-05-12T00:47:15","slug":"fiscal-cliff-deal","status":"publish","type":"post","link":"https:\/\/sommers-taxapedia.com\/archives\/fiscal-cliff-deal\/","title":{"rendered":"Fiscal Cliff Deal"},"content":{"rendered":"

Congress dove off the fiscal cliff at midnight, December 31st<\/sup>, but then quickly passed legislation preserving the Bush tax cuts for all but the highest income earners.\u00a0 The full text of the legislation is contained in H.R. 8.<\/a><\/p>\n

Individuals<\/strong><\/p>\n

Despite President Obama\u2019s insistence that those earning more than $250,000 pay higher taxes, the final amount was almost doubled to $400,000 for single files and $450,000 for married couples. (\u201cnew ceiling\u201d).<\/p>\n

Income exceeding the new ceiling is taxed as follows (i) capital gains and dividends at 20%; and (ii) ordinary income (compensation, retirement distribution, rents, interest, royalties) at 39.6%, the rate under President Clinton.\u00a0 The alternative minimum tax exemptions were increased to $50,600 for individuals ($78,750 for joint filers) and indexed for inflation.<\/p>\n

Deductions and Credits<\/strong><\/p>\n

Itemized deductions remain subject the phase-out rules, but the thresholds have been raised to $250,000 for individuals and $300,000 for married couples. \u00a0Tax credits have been continued for five years, including the earned income credit, educational credits and the child care credit.<\/p>\n

\u00a0New Obamacare Tax<\/strong><\/p>\n

Starting in 2013, investment income [1. Generally, investment income is all income except compensation, active business income, municipal bond interest, life insurance proceeds and retirement distributions] is subject to an additional 3.8% tax to pay for Obamacare and applies to income in excess of $200,000 for individuals and $250,000 for married couples.<\/p>\n

\u00a0Estate and Gift Tax<\/strong><\/p>\n

The 2012 estate and gift tax rules will continue with one minor modification.\u00a0 The unified estate and gift exemption remains at $5 million per individual ($10 million for a couple) and is indexed for inflation ($5,120,000 in 2013), but the tax rate is increased to 40%.<\/p>\n

\u00a0Payroll Tax and Unemployment Benefits<\/strong><\/p>\n

The 2% break for payroll taxes on the first $113,000 of compensation will expire, thus raising taxes for almost all wage earners; however, long-term unemployment benefits are extended for another year.<\/p>\n

\u00a0S Corporations<\/strong><\/p>\n

The 10-year waiting period for built-in gains (gains taxed at the corporate rate of 35%) has been slashed to 5 years, so small corporations with built-in gains may want to convert to S corporation status.\u00a0 After the five-year period, those gains will be taxed at individual capital gains rates (15% for those under the ceiling).<\/p>\n

\u00a0Miscellaneous Provisions<\/strong><\/p>\n

The rules regarding income from the discharge of indebtedness involving a principal residence were continued through 2013.\u00a0 Research and development credits were extended, as well as the 50% bonus first year depreciation tax break.<\/p>\n

Footnotes<\/span><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Congress dove off the fiscal cliff at midnight, December 31st, but then quickly passed legislation preserving the Bush tax cuts for all but the highest income earners.\u00a0 The full text of the legislation is contained in H.R. 8. Individuals Despite President Obama\u2019s insistence that those earning more than $250,000 pay higher taxes, the final amount …Continue reading<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,6],"tags":[],"class_list":["post-445","post","type-post","status-publish","format-standard","hentry","category-general-tax-information","category-wealth-preservation"],"_links":{"self":[{"href":"https:\/\/sommers-taxapedia.com\/archives\/wp-json\/wp\/v2\/posts\/445","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sommers-taxapedia.com\/archives\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sommers-taxapedia.com\/archives\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sommers-taxapedia.com\/archives\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/sommers-taxapedia.com\/archives\/wp-json\/wp\/v2\/comments?post=445"}],"version-history":[{"count":4,"href":"https:\/\/sommers-taxapedia.com\/archives\/wp-json\/wp\/v2\/posts\/445\/revisions"}],"predecessor-version":[{"id":452,"href":"https:\/\/sommers-taxapedia.com\/archives\/wp-json\/wp\/v2\/posts\/445\/revisions\/452"}],"wp:attachment":[{"href":"https:\/\/sommers-taxapedia.com\/archives\/wp-json\/wp\/v2\/media?parent=445"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sommers-taxapedia.com\/archives\/wp-json\/wp\/v2\/categories?post=445"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sommers-taxapedia.com\/archives\/wp-json\/wp\/v2\/tags?post=445"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}