On January 1 2013, Congress passed the American Taxpayer Relief Act. It approved a variety of extensions and modifications. Here are a few of the most general extensions for both business and personal tax.
Business
Section 179. The Act extended increased expensing limitations and treatment of certain real property as section 179 property. In addition, the Act extended and modified bonus depreciation.
Charitable Donations. The Act approved another extension, this time of enhanced charitable deduction for contributions of food inventory. Also, the Act extended basis adjustment to stock of S corporations making charitable contributions of property.
Personal
Individual Rate Changes. While taxes for individuals paying at the 10, 15, 25, 28, 33, and 35 percent rate will remain unchanged, a new 39.6 percent rate now applies to joint filers and surviving spouses making more than $450,000, heads of households making more than $425,000, single filers making more than $400,000, and married couples filing separately who make more than $225,000.
Capital Gains and Dividend Earnings. Taxes on capital gains, including profit realized on the successful sale of a business or on dividends for investors will also be increasing for some earners. The new Act permanently raises the tax rate to 20 percent for individuals with incomes exceeding $400,000 or married filers exceeding $450,000. That tax rate rises to 23.8 percent after adding a Medicare surtax on investment income.
Estate and Gift Tax. These rates will be raised for those at the upper end of the spectrum. The top estate, gift, and generation-skipping-transfer (GST) rate will be permanently raised from 35 to 40 percent for individuals dying and gifts given after 2012. In addition, the Act sets the exemption above which that tax must be paid at $5 million.
Limits on itemized deductions. Itemized deductions will be reduced by 3 percent of the amount by which each taxpayer’s AGI exceeds the thresholds established under the personal exemption phaseout.
Plack Group: Who We Are
Founded on a simple yet powerful principle – helping people – Plack Group is more than just an account firm. We create effective solutions that embody your core values and beliefs. From our home in Bel Air, Maryland, we’re proud to serve kind and dedicated clients across the United States.
We’ll say what others might not: we love our clients. Our commitment extends far beyond tax returns and financial analysis. We offer the same thoughtful guidance and strategic advice we’d give our own family.
At Plack Group, we take a highly personalized approach to helping our clients succeed. No two businesses or people are alike, so why would we treat them that way? We specialize in complex tax scenarios for individuals and business owners. Our experienced team of CPAs, accountants, and consultants find solutions and tax strategies others miss. If you’re a high-achiever, forward-thinker, actively engaged in your business, and want to prioritize your family, Plack Group is your right fit. We work with you to create a strong financial future that reflects your personal faith, values, and beliefs.
