THE REST OF THE 2013 INFLATION ADJUSTMENTS

Now that the American Taxpayer Relief Act of 2012 has become law the IRS has issued the balance of the annual inflation adjustments for 2013.  Here are some of these adjustments (all amounts below pertain to 2013 income tax returns filed in 2014) -

• A new tax rate of 39.6 percent has been added for Single filers whose income exceeds $400,000, $425,000 for Head of Household, $450,000 for Married Filing Joint, and $225,000 for Married Filing Separate. 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 for Single and Married Filing Separate, $8,950 for Head of Household, and $12,200 for Married Filing Joint.

The Standard Deduction for a dependent is the greater of (1) $1,000, or (2) the sum of $350 and the individual's earned income (up to $6,100).

The additional Standard Deduction amount for the age 65 or older or blind is $1,200 for married individuals and $1,500 for Single and Head of Household.

• The personal exemption rises to $3,900.  The exemption is subject to a PEP phase-out that begins with adjusted gross incomes of $250,000 for Single, $275,000 for Head of Household, $300,000 for married couples filing joint, and $150,000 for Married Filing Separate.

 • The Pease limitation for itemized deductions claimed on returns of Single filers with incomes of $250,000 or more, $275,000 for Head of Household, $300,000 for Married Filing Joint, and $150,000 for Married Filing Separate.

• The Alternative Minimum Tax exemption amount is $51,900 for Single and Head of Household, $80,800 for Married Filing Joint and $40,400 for Married Filing Separate.  The 28% AMT tax rate kicks in at AMT taxable income of $179,500 ($89,750 for Married Filing Separate).

 • The Estate Tax “unified credit” exclusion is $5,250,000.

The 2013 inflation adjustments are identified in Revenue Procedure 2013-15.

TTFN