Embarking on the New Tax “Frontiers”

Preparing for the 2014 “Tax Tier” Filing Season

“I know the law…I am its greatest transgressor.” – Judge Roy Bean.

It’s a little more complex than counting beans these days.

JRB

Well, folks, another year has passed, and as we know, with each New Year comes new tax planning and preparation.  This filing year will be one particularly full of bustle and grit. Welcome to the Wild West, and our new convoluted tax tier system.

With the fiscal cliff compromise bill passed on January 2, 2013, The American Taxpayer Relief Act (the “Act”) preserved Bush-era rates for certain taxpayers, but revived limitations on deductions and exemptions, such as:

  • Those with taxable income over $400,000 (single filers)/$450,000 (joint filers) will now be subject to the 39.6% tax rate
  • Personal exemptions will now begin to be phased out for those with adjusted gross income of $250,000 (single filers)/$300,000 (joint filers)
  • Itemized deductions will begin to be limited (new “Pease” limit) for those with an adjusted gross income of $250,000 (single filers)/$300,000 (joint filers)

Other considerations for 2013 include these new taxes, under the Affordable Care Act (“ACA” or “Obamacare”):

  • 0.9 percent additional Medicare tax; imposed on those with earned income of $200,000 (single filers)/ $250,000 (joint filers)
  • 3.8 percent surtax (net income investment tax); imposed on those with net investment income of $200,000 (single filers)/$250,000 (joint filers)

We have put together a comprehensive chart of this year’s new tax tier highlights under the Act, which we hope you will find a good resource throughout this filing season.

To help illustrate the different tax tiers, please take a look at some hypothetical examples we have provided here.

Even though this new tax tier system seems like a wild ride, let us help to ensure yours is a smooth one.  We wish each of you a healthy and thriving 2014 as we embark on this year’s tax planning frontiers.

If you would like to learn more about how these complex new rules apply to you, please contact us at info@maddoxthomson.com

  • Archives


Join Our Email List