This document provides a summary and overview of new tax legislation under the American Taxpayer Relief Act of 2012 and the Patient Protection and Affordable Care Act. It outlines changes to the top marginal tax rates, capital gains rates, deductions, exclusions, and new Medicare taxes on wages and investment income for high-income taxpayers.
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we inform you that any U.S. federal tax advice contained in this communication
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5. A Quick Snapshot
Key Tax Changes
2012
2013
35%
39.6%
Long term capital gains
rate and qualified
dividend tax rates
0%
(for 10% and 15% tax
brackets)
15%
(for 25%-35% tax
brackets)
0%
(for 10% and 15% tax
brackets)
15%
(for 25%-35% tax
brackets)
20%
(for 39.6% tax bracket)
Itemized deduction and
personal exemption
phase out
NO
YES
For incomes $200,000 –
single and $300,000 married
Medicare tax on
wages/net investment
income
NO
Yes
For incomes $200,000 –
single and $250,000 married
Top income tax rates
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6. Quick Snapshot cont..
Key Tax Changes
2012
2013
Medical expense
itemized deduction
7.5% of AGI
10% of AGI
Estate, gift and GST
exclusion
5.12 Million
$5.25 Million
Top Estate Tax rate
35%
40%
$13,000
$14,000
Annual gift tax
exclusion
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8. Medicare tax and Investment income
• 0.9% increase for wages or self-employment
income over the threshold
• 3.8% new tax rate on investment income
when MAGI exceeds threshold
Applies to “high income taxpayers”
Single – MAGI is greater than $200,000
Joint - MAGI is greater than $250,000
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9. Net investment income includes
• Taxable interest
• Dividends
• Capital gains
• Annuity income
• Income from passive activities
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