On January 15, 2013, the Internal Revenue Service issued IR-2013-4 and Rev. Proc. 2013-15, which address new inflation-adjusted amounts for 2013. Generally, these inflation-adjusted figures apply to tax years beginning in 2013. These inflation amounts address everything from new tax tables reflecting the 39.6% tax bracket, the beginning income levels for the limitation on certain itemized deductions, and the beginning income levels for the phase-out of personal exemptions, among other things.
The Adoption Credit has been raised from $12,650.00 in 2012, to $12,970.00. The credit begins to phase-out for taxpayers with modified adjusted gross income (MAGI) in excess of $194,580.00, and is completely phased out for taxpayer’s with a MAGI of $234,580.00 or more. The phase-out for 2012 began at $189,710.00, and completely phased out at $229,710.00 for 2012.
The Earned Income Tax Credit maximum amount for 2013 has been raised to $6,044.00 for taxpayers with more than two qualifying children. The amount was $5,891.00 for 2012. For taxpayers with two qualifying children the maximum amount was raised to $5,372.00, from $5,236.00 in 2012. For taxpayers with one qualifying child the maximum amount for 2013 is $3,250.00; up from $3,169.00 in 2012. The maximum amount for taxpayers with no qualifying children was raised to $487.00, up from $475.00 in 2012. The credit amount begins to phase out at an income level of $17,530.00 ($7,970.00 for taxpayers with no qualifying children). The credit is not allowed if the aggregate amount of certain investment income exceeds $3,300.00
Alternative Minimum Tax (AMT) exemption amounts have been raised for 2013. The exemption amounts are $51,900.00 (single, head-of-household), $40,400.00 (married filing separately), and $80.800.00 (married filing jointly, surviving spouse). The amounts for 2012 were $50,600.00 (single, head-of-household), $78,750.00 (married filing joint, and surviving spouse), and $39,375.00 (married filing separately).
The standard deduction amounts under IRC §63(c)(2) for 2013 are $12,200.00 (married filing joint, surviving spouse), $8,950.00 (head of household), and $6,100.00 (unmarried and married filing separately). The amounts for 2012 were $11,900.00 (married filing joint, surviving spouse), $8,700.00 (head of household), and $5,950.00 (unmarried, married filing separately). The standard deduction that can be claimed as a dependent by another taxpayer cannot exceed the greater of $1,000.00 or the sum of $350.00 plus the individual’s earned income. The additional standard deduction for the aged or blind is $1,200.00 ($1,500.00 if the individual is also unmarried and not a surviving spouse).
For 2013, the personal exemption for 2013 is $3,900.00. That is up from $3,800.00 in 2012. New for 2013 the personal exemption starts to phase out when AGI exceeds $250,000.00 (single), $275,000.00 (head of household), $300,000.00 (married filing joint), and $150,000.00 (married filing separately). The personal exemption completely phases out at $371,501.00 (single), $397,501.00 (head of household), $422,501.00 (married filing joint) and $211,251.00 (married filing separate).
These are the final guidelines for the inflation adjustments for 2013.
For more information visit www.smalleynco.com
If you have any questions you can email Craig W. Smalley E.A.
Author of the books: It Starts With an Idea – Tax Tips for Small Businesses available on Nook and Kindle, The Ultimate Real Estate Investor Tax Guide, available on Nook and Kindle, The Complete Guide to the New Tax Law – American Taxpayer Relief Act of 2012 available on Nook and Kindle, Everything You Wanted to Know about the IRS – Audits, Appeals and Collections available on Nook and Kindle, and Tax Avoidance is Legal! The Complete Guide to Individual Income Tax available on Nook and Kindle