Picture of Doris
In This Issue
401(k) Limits
2013 Mileage Rates
January 1, 2013 Legislation
1099 Reporting
Tax Image
NEW 2013
401(k) and Pension Limits
  • The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans and the federal government's Thrift Savings Plan is increased from $17,000 to $17,500.
  • The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans and the federal government's Thrift Savings Plan remains unchanged at $5,500.
  • The limit on annual contributions to an Individual Retirement Arrangement (IRA) rises to $5,500, up from $5,000 in prior years.
  • The limitation for defined contribution plans  is increased in 2013 from $50,000 to $51,000.
  • The annual compensation limit is increased from $250,000 to $255,000.

    • NEW 2013
    Standard Mileage Rates:      

     

    Per Mile

     

    Business: 56.5¢

     

    Medical or Moving: 24¢

     

    Service of Charitable Organizations: 14¢


    House for Sale

    Did you move or

    change your email address in 2012?

     

    Call or email the office and let us know!
    January 2, 2013 Newsletter

    Greetings! 

     

    Finally, Congress acted on tax legislation for both 2012 and 2013 and beyond! The legislation was passed by both houses of Congress on January 1, 2013. The bill will be signed into law by President Obama. Below is a high level summary of the legislation.

    Summary of legislation regarding 2013 taxes
    1. The Payroll Tax holiday on the employee's share of Social Security Taxes expired and the tax has increased from 4.2% from 6.2%. Your take home pay will be impacted on your first paycheck of the year.

    2. Income taxes.The Act will keep the "Bush" tax rates intact for individuals with taxable income under $400,000 ($450,000 for married taxpayers, $425,000 for heads of household). Income above these levels would be taxed at a 39.6% rate.

    3. Capital gains and dividends. The Act will raise the top rate for dividends and capital gains from 15% to 20% for taxpayers who will be subject to the new 39.6% bracket.

    4. AMT patch.The Act will permanently patch the alternative minimum tax (AMT).

    5. Deduction limitations for high-income individuals.The Act will reinstate the limitations on the personal exemption and itemized deductions (at income levels above $300,000 for married filers and $250,000 for single filers).

    6. Transfer taxes.The Act will prevent steep increases in estate, gift and generation-skipping transfer (GST) tax that were slated to occur for individuals dying and gifts made after 2012 by setting the exemption level at $5,000,000 (and indexed for inflation in future years). However, the Act will also permanently increase the top estate, gift and GST rate from 35% to 40%.

    7. Individual extenders for 2012.The Act will extend a host of individual provisions, including the treatment of mortgage insurance premiums as qualified residence interest, deductions for State and local general sales taxes, and the above-the-line deduction for qualified tuition and related expenses.

    8. Business tax extenders for 2012.Many key business tax breaks will be extended including depreciation provisions, notably including bonus depreciation, and the research and work opportunity tax credits.

     Business & Rental 1099 Reporting
    • If you own a business or have rental property be prepared to answer the following questions on your tax return:
      • Did you make any payments in 2012 that would require you to file Form(s) 1099?
      • If "Yes", did you or will you file all required Forms 1099?
    • What this means is the IRS is cracking down on those who should be reporting payments on 1099s and are not.
    • As a reminder, 1099s should be issued to non-corporations / individuals who provide services (not product) to your business. For example, payments for services performed for a trade or business by people not treated as its employees such as a plumber or an interior decorator.
    • You can file these 1099s on your own or my office can help.
    • Also, you may receive a Form 1099-K from your credit card processing company. The purpose of this form is to facilitate tax return reporting of both credit card and cash receipts for all businesses.This includes rental businesses.

    The IRS has announced that the opening of the tax season will be delayed as they work feverishly to prepare the 2012 tax forms and computer systems now that the legislation has been finalized. Our office will be sending out the tax organizer packages in mid to late January. Contact the office if you have a change of email or physical address. As always, I am honored to handle your tax and accounting matters. Thank you for your business!

     

     

    Sincerely,

     
    Doris Cloud 

     

    This newsletter is for general guidance only, and does not constitute tax advice or professional consulting. Before any action, consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information.