IRS Announces 2013 Annual Inflation Adjustments
The IRS has announced 2013 annual inflation adjustments, including an estate tax exemption of $5.25 million per person, up from $5.12 million in 2012. For married couples, the exemption goes to $10.5 million.
The fiscal cliff tax deal signed into law on Jan. 2 made the estate and gift tax exclusions permanent and indexed both for inflation, so they will continue to increase over time. The recent IRS announcement also included these changes:
Beginning in tax year 2013, a new tax rate of 39.6 percent has been added for individuals whose income exceeds $400,000 ($450,000 for married taxpayers filing a joint return). The other marginal rates - 10, 15, 25, 28, 33 and 35 percent - remain the same as in prior years.
The standard deduction rises to $6,100 ($12,200 for married couples filing jointly), up from $5,950 ($11,900 for married couples filing jointly) for tax year 2012.
The American Taxpayer Relief Act of 2012 added a limitation for itemized deductions claimed on 2013 returns of individuals with incomes of $250,000 or more ($300,000 for married couples filing jointly).
The personal exemption rises to $3,900, up from the 2012 exemption of $3,800. However, beginning in 2013, the exemption is subject to a phase-out that begins with adjusted gross incomes of $250,000 ($300,000 for married couples filing jointly). It phases out completely at $372,500 ($422,500 for married couples filing jointly).
The Alternative Minimum Tax exemption amount for tax year 2013 is $51,900 ($80,800 for married couples filing jointly), set by the American Taxpayer Relief Act of 2012, which indexes future amounts for inflation. The 2012 exemption amount was $50,600 ($78,750 for married couples filing jointly).
The maximum Earned Income Credit amount is $6,044 for taxpayers filing jointly who have three or more qualifying children, up from a total of $5,891 for tax year 2012.
The Flanigan Law Group provides Southern California residents with personal attention for estate planning, administration and litigation legal services. When disputes between families, arise, they are very successful in resolving legal estate issues quickly and efficiently while preserving financial and emotional resources. Contact the Flanigan Law Group at 949-450-0042.