{I hear that the Senate has passed a bill. But it ain't over till it's over. And I do not hear the fat lady warming up yet. The House still has to accept, reject, or revise the bill}
Wellwe have done it – American has fallen over the “fiscal cliff”.
Actuallythat is not quite true. As Rex Nuttingexplained in his commentary “Stop Calling It A Fiscal Cliff” at MARKETWATCH.COM-
“The fiscal cliff is a misleading metaphor.The laws will change on that day, it’s true, but the impact will be spread outover many, many months. In fact, the effects are already being felt,particularly in financial markets. Businesses, investors, workers and consumershave begun to prepare for the changes, and that’s caused the economy to slow abit already.
It’s not a NiagaraFalls, with billions of gallons going over a cliff. It’s more like a bathtubslowly filling up. And, on Jan. 1, it’s going to spill over the edge.Eventually, it will flood the house, but that’ll take time.
It’s not an explosion;it’s water torture.”
Whathas happened, from a tax point of view, is this – the idiots in Washington havedone nothing to extend the tax law that expired on December 31, 2011, andDecember 31, 2012.
Sowhat is new for taxes for 2013?
(1) The contribution limits for tax-deferredpension accounts are -· IRA= $5,000· IRACatch-Up Contributions at age 50 and older = $1,000· SIMPLEPlan = $12,000· SIMPLECatch-Up Contributions at age 50 and older = $2,500· 401(k),403(b), Profit Sharing Plans = $17,500· Catch-UpContributions for these plans at age 50 and older= $5,500(2) The Standard Mileage Allowance ratesare – • 56.5 cents permile for business • 24 cents permile for medical or moving • 14 cents permile in in service of charitable organizations (3) The following provisions ofObamacare take affect –· The employee’s share of the Medicare tax increases by 0.9% - to2.35% - for taxable wages over $200,000 for single filers, $250,000 for jointfilers, and $125,000 for married couples filing separately. The self-employmenttax is similarly increased on these levels of income.· A new 3.8% “surtax” on “net investment income” is added on theForm 1040 for taxpayers with “modified” AGI (MAGI) over $200,000 for singles,$250,000 for joint filers, and $125,000 for married couples filingseparately. · Ifyou are under age 65 you will only receive a tax benefit for your itemizedmedical expenses if the total of your allowable expenses exceeds 10% of yourAdjusted Gross Income (AGI). · Employeecontributions to an employer-provided medical expense FSA are limited to $2,500per year.Whatelse? To be honest – God only knows, andhe ain’t talking!If the idiots inWashington continue to do nothing we will be taxed like its 1999, or actually2000. The so-called “Bush” tax cuts andthe various BO tax benefits expired on December 31, 2012. Therefore, as of January 1, 2013, the Tax Codepretty much goes back to the way it was on December 31, 2000, unless there issome kind of tax extension or tax reform legislation passed.Actually, at thispoint we really do not know how we are being taxed for 2012 either. The popular “extenders”, including the AMT patch,expired on December 31, 2011.So, based on the TaxCode as of this writing, American taxpayers will need to dig deep in theirpockets to pay their 2012 and 2013 federal income tax bills!My only hope is thatthe idiots in Washington at least act on the dreaded AMT and the other“extenders” before the end of January so I can begin the “season” knowing howto properly prepare 2012 tax returns.Regardless of yourpolitical “persuasion” – the Republicans, the Democrats, and BO are all equallyguilty of acting like idiots during this nonsense. TTFN
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