The Tax Cliff Approaches
Posted on Wednesday, October 03, 2012 Share
According to a report released today by the Tax Policy Center, there is a fiscal cliff coming for US taxpayers on January 1, 2013 that will boost taxes by more than $500 billion in 2013. Almost 90 percent of all Americans would pay more tax due to the expiration of tax cuts enacted in the last decade.
The brunt of the increase for most households would be caused by the expiration of two lucrative tax incentives, the so-called Bush tax cuts from 2001 and 2003, and the temporary cut in Social Security taxes that has been in place for two years. Middle-income households could see a tax increase on average of $2,000.
Other significant provisions that would expire include the higher exemption for the alternative minimum tax (AMT), the increased estate and gift tax exemptions, and the reduced tax rates on long-term capital gains and qualified dividends.
In addition, new provisions under the Obama Health Care law will begin to take effect in 2013, such as the new 3.8% tax that high-income individuals will pay on investment income.
Hopefully Congress will act before the end of 2012 to restore or extend many of the existing provisions so that the bulk of this unintended tax increase can be avoided. Certainly recent history has shown that Congress normally comes through at the 11th hour with a fix for many of these provisions. DWD will keep you up to date on these changes and what actions you can take this year to avoid tax peril in 2013.
Should you have any other questions, please contact our Fort Wayne or Marion office.
(The article from the Tax Policy Center can be found at http://www.taxpolicycenter.org/UploadedPDF/412666-toppling-off-the-fiscal-cliff.pdf )
Posted in Tax And Accounting Topics For Business
Disclaimer: The information contained in Dulin, Ward & DeWald’s blog is provided for general educational purposes only and should not be construed as financial or legal advice on any subject matter. Before taking any action based on this information, we strongly encourage you to consult competent legal, accounting or other professional advice about your specific situation. Questions on blog posts may be submitted to your DWD representative.