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Tax facts, stats and changes for 2013

The tax code is ever evolving and 2013 will be no different for taxpayers. The following are some key facts and changes to the tax code for the upcoming year:

• There are seven income brackets; 10%, 15%, 25%, 28%, 33%, 35% and 39.6% individual tax rates for 2013.

• Standard deductions were increased to $12,200 for those married filing jointly, $8,950 for those filing as head of household, and $6,100 for those filing as single.

• The personal exemption amount has been raised to $3,900.

• The top estate tax rate is 40% with a estate tax exemption of $5.25 million.

• Section 179 deduction is up to $500,000 for capital assets acquired in 2013.

• 50% bonus depreciation is allowed for qualified assets placed in service through the end of 2013.

• An individual can contribute up to $17,500 to their 401(k) plan for 2013.

• The tax on capital gains and qualified dividends is 0% for those in the 15% income tax bracket or below, 15% for those in the 25%, 28% 33% and 35% income tax brackets and 20% for those in the 39.6% bracket.

• Required minimum distributions must begin in the year a participant turns 70 1/2.

• The IRA contribution limit increased to $5,500 or $6,500 if the participant is 50 or older.

• The social security taxable wage limit was increased to $113,700 this year from $110,100 for last year. Also changed, retirees under full retirement age now can earn up to $15,120 without losing benefits.

• The employee OASDI (Social Security) tax rate reverted back to 6.2%. Also, the OASDI tax rate under SECA (self-employment tax) reverted back to at 12.4% .

• Mileage rates for business and medical were increased to $0.565 and $0.24 respectively. The mileage rate for charity remains the same at $0.14.

For those of you who forgot a Valentine’s Day present for their significant other, I have taken care of it for you. I prepared a reference guide, the 2013 Tax Facts at a Glance, which highlights important tax rates and deductions for businesses and individuals. (If you want a laminated copy for your loved one, shoot me an email with your address and I can mail you one. I have about 50 leftovers.)

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