Income Tax Considerations for Individuals – Part 4 of 4
My prior few blogs spoke about some of the big changes taxpayers will be facing as they file their 2013 tax returns. Among them are increased ordinary tax rates, increased capital gain rates, the new 3.8% Medicare Contribution Tax, the phase-out of personal exemptions and reduction of itemized deductions, etc. What does this look like when we combine all the changes? The following example compares the tax increase on the exact same taxable income of a family between 2012 and 2013.
Example: Married Filing Joint
|Non-Qualified Stock Options||$100,000||$100,000|
|Short-Term Capital Gains||$40,000||$40,000|
|Long-Term Capital Gains||$100,000||$100,000|
|Adjusted Gross Income||$815,000||$815,000 A|
|Less Itemized Deductions||-$98,000||-$82,550 B|
|Less Exemptions||-$19,000||$0 C|
|A||Adjusted Gross Income remains the same|
|B||Higher-income families will see a reduction in their itemized deductions|
|C||Higher-income families will also see a reduction or full loss of their personal exemption|
Please click here to view our Year-End Tax Planning series.