Last week I showed you which provisions were no longer available in 2012 and now I want to show you what is set to disappear in 2013.
- The 10% bracket disappears (the lowest bracket is 15%)
- The top four brackets rise from 25%, 28%, 33% and 35% to 28%, 31%, 36% and 39.6%.
- Long-term capital gain is taxed at a maximum rate of 20% (18% for assets held more than five years). For lower-income taxpayers, the maximum rate will be 10% (8% for assets held for more than five years).
- Dividends paid to individuals are taxed at the same rates that apply to ordinary income.
- The annual per-beneficiary contribution limit drops to $500 for contributions to Coverdell Education Saving Accounts and you can no longer contribute as late as April 15th of the following year for which the contribution is made.
- The standard deduction for married taxpayers filing jointly (and qualified surviving spouses) is 167% (rather than 200%) of the standard deduction for single taxpayers.
- Credit for dependent care expenses drops from $3,000 (for 1 child) and $6,000 (for 2 or more children) to $2,400 and $4,800.
- The child credit drops from $1,000 to $500 and is not allowed against AMT.
- The top rate for estate tax increases to 55% and the unified credit exemption drops to $1 million
- The top rate for gift tax increases to 55%.
- The work opportunity credit for hiring qualified veterans under Code Sec. 51(c)(4)(B) won’t be available for individuals hired after Dec. 31, 2012.
- The 50% bonus first-year depreciation allowance for qualified property. The bonus depreciation break applies only for qualified property acquired and placed in service after 2011 and before 2013.
- For tax years beginning in 2013, for Section 179 property the maximum expensing amount is $25,000 and the investment ceiling is $200,000. Compare that to 2012 when the maximum was $139,000 and the investment ceiling was $560,000.
- The temporary payroll tax cut will no longer apply. The two percentage point cut in employee tax under FICA (from 6.2% to 4.2%) and in the self-employed tax rate (from 12.4% to 10.4%) expires at the end of this year. Thus, after 2012, the rates for employees and for the self-employed will revert to 6.2% and 12.4% respectively.
- The expanded Hope credit (American Opportunity Tax Credit or AOTC) comes to an end on Dec. 31, 2012. Under the AOTC, eligible taxpayers can claim a credit equal to 100% of the first $2,000 of qualified tuition and related expenses, and 25% of the next $2,000 of qualified tuition and related expenses (for a maximum tax credit of $2,500 for the first four years of post-secondary education). After 2012, the credit will fall to 100% of the first $1,000 of qualified tuition and related expenses, and 50% of the next $1,000 of qualified tuition and related expenses.
- The refundable credit for unused AMT credit will end.
- The Code Sec. 108(a)(1)(E) exclusion for discharge of qualified principal residence debt does not apply for debt discharged after Dec. 31, 2012.
If you ask me Romney and Obama could be addressing how they would like to handle these issues instead of telling me what the other does wrong and it would be a lot more helpful in helping me make up my mind who I’m going to vote for.