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2013 Federal Income Tax Developments Affecting Individuals and Families

Numbers, numbers, numbers – 2012 and 2013 The following list contains some of the “number” changes (many based on mandated inflation adjustments) that Magellan Jets thought you might find interesting and helpful for 2013 planning (with 2012 comparative numbers). Please note that the “numbers” reflect American Taxpayer Relief Act, signed into law by President Obama on January 3, 2013. (A publication of Nixon Peabody LLP)

Federal Income Tax Items

2012

2013

Top federal marginal tax rate for ordinary income
(applicable for taxable income over $388,350 joint and single in 2012 and $450,000 joint and $400,000 single in
2013); lower tax brackets are 10%, 15%, 25%, 28%, and
33% in 2012 and 10%, 15%, 25%, 28%, 33% and 35% in
2013

35%

39.6%

Federal tax rate for long-term capital gains (assets held for
more than one year) for individuals in the 10% and 15% tax brackets (taxable income of up to $72,500 joint and $36,250 single in 2013)

0%

0%

Federal tax rate for long-term capital gains (assets held for
more than one year) for individuals in the 25%, 28%, 33% and 35% brackets (taxable income of up to $450,000 joint and $400,000 single in 2013)

15%

15%

Federal tax rate for long-term capital gains (assets held for
more than one year) for individuals in the 39.6% bracket
(taxable income over $450,000 joint and $400,000 single in
2013)

N/A

20%

Federal tax rate on the portion of long-term gain from real
estate that represents depreciation recapture (so-called
“Section 1250 gain”)

25%

25%

Federal tax rate on long-term gain from collectibles (art,
antiques, precious metals, gems, stamps, coins, etc.)

28%

28%

Federal tax rate on long-term gain on small business stock
eligible for the 50% exclusion

28%

28%

Federal Income Tax Items

2012

2013

Federal tax rate for qualifying dividend income for
individuals in the 10% and 15% tax brackets (taxable income of up to $72,500 joint and $36,250 single in 2013)

0%

0%

Federal tax rate for qualifying dividend income for
individuals in the 25%, 28%, 33% and 35% brackets
(taxable income of up to $450,000 joint and $400,000 single in 2013)

15%

15%

Federal tax rate for qualifying dividend income for
individuals in the 39.6% bracket (taxable income over
$450,000 joint and $400,000 single in 2013)

N/A

20%

Standard deduction
Married filing jointly
Head of household
Single or married filing separate returns
Additional amount for aged or blind
– married filing jointly
– single

$11,900
$8,700
$5,950

$1,150
$1,450

$12,200
$8,950
$6,100

$1,200
$1,500

Net unearned income of children under age 19 and
dependent fulltime students under 24 that escapes the
“kiddie” tax (child taxed at parent’s marginal rate)

$1,900

$2,000

“Kiddie” standard deduction

$950

$1,000

Personal exemption amount (subject to “phase out,” as noted
below)

$3,800

$3,900

Amount of 2013 taxable income at which the $3,900
personal exemption begins to “phase out.” In 2012, no phase out applies.
Married filing jointly Head of household Single
Married filing separately

N/A N/A N/A N/A

$300,000
$275,000
$250,000
$150,000

Applicable amount of 2013 adjusted gross income (AGI)
after which itemized deductions are reduced (by 3% of the AGI over this applicable amount). In 2012, no reduction applies.
Married filing jointly Head of household Single
Married filing separately

N/A N/A N/A N/A

$300,000
$275,000
$250,000
$150,000

Taxable wage base for Social Security and self-employment
income

$110,100

$113,700

Per the Patient Protection and Affordable Care act (PPACA),
Medicare surtax on investment income when Modified Adjusted Gross Income (MAGI) (AGI plus foreign earned income) exceeds the following thresholds:
Married filing jointly – $250,000
Single – $200,000
Tax is assessed on the smaller of the filer’s investment income or the excess of MAGI over the applicable threshold amount.

Federal Transfer Tax Items

2012

2013

Top estate tax rate

35%

40%

Top gift tax rate

35%

40%

Top Generation Skipping Tax (GST) rate

35%

40%

Annual gift tax exclusion per donee

$13,000

$14,000

Applicable lifetime gift tax exemption

$5,120,000

$5,250,000

Applicable estate tax exemption

The exemption amount does not reflect “Portability,” which is the ability to utilize the unused estate exemption of a spouse who died in 2011 or later.

$5,120,000

$5,250,000

Applicable generation-skipping tax (GST) exemption

$5,120,000

$5,250,000

Spousal transfers during life or at death (U.S. citizens)

Unlimited

Unlimited

Annual gift tax exclusion for transfer to non-citizen spouse

$139,000

$143,000

Reporting threshold for gifts received from foreign corporations and partnerships

$14,723

$15,102

Reporting threshold for gifts received from non-resident aliens and foreign estates

$100,000

$100,000

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