(Atlantic) The year 2013 brings with it some new provisions to the tax code. Kevin Garrett, Certified Public Account at 401 East Poplar Street in Atlantic says the first thing wage earners are noticing is the increase in Social Security tax.
“One thing that isn’t going to affect the tax return as much as the paycheck is the social security tax that went back up to 6.2% withheld on employees paychecks,” stated Garrett. “The last two years it had been reduced to 4.2% so we are going to see a little decrease in our net paycheck.”
Garrett says another change has to do with IRA money. “The tax law that was just passed the first of the year brought back the donation of IRA money for those over 70 ½ that are required to take distributions from their IRA’s,” said Garrett. “Those people are now allowed to take those distributions and contribute them directly to a qualified charity without paying a tax on it, “so that is a good thing” that the government brought back.”
The Government also extended the American Opportunity Credit for higher education for another 4-year. So there is potential for a $2,500 tax credit for parents that have children in college.
And the government also brought the estate and gift tax exemption back up to $5-million that was due to drop to $1-million.
The capital gains tax did not change for those earning under $400,000. For those earning more than $400,000 it is now 20%.
The tax rates also rose for those making $400,000 or $450,000 jointly, but stayed the same for everyone earning under that.
January 8, 2013