2013 U.S. Tax Changes that May Need Your Attention

2013 U.S. Tax Changes that May Need Your Attention

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The arrival of New Year brings new laws and regulations with it. Tax is one such field that witnesses new rules and regulations every year. For the year 2013, the government of the United States has already applied several changes to this field. This directly indicates that the citizens will have to plan for making diligent use of their hard-earned money.

You certainly have to take efforts to know about these new changes for this year so that you can easily escape the grave repercussions on your financial status. Well, there is no need for you to search here and there, as this post compiles the new tax laws for 2013 so that you can educate yourself from one source.

Payroll Tax

Changes in this tax are much in gossip, this year. One of the major changes is the elimination of the Social Security tax reduction of 2% that existed as a temporary incentive for aiding citizens during the economic austerity. This means that the income earners will now have to pay a tax of 6.2%, not 4.2%. Although the increase by 2% is not that high, it is surely going to reduce the dollars earned through work – the effect that will be considerable for the middle and lower classes.

More Tax for High-Income Earners

According to the new amendments, married couples earning over $450,000 and single citizens making over $400,000 will now have to prepare themselves to pay more tax. Before 2013, the annual taxable income was subject to 35% tax. However now, this rate has been increased to 39.6%, which is almost a rise by 4.6%.

One more tax field that has shown up a rise is the capital gain tax rate, which is bound to affect high-income earners. In 2013, the rate of tax on capital gains and dividends has been raised up to 20% for all belonging to the highest tax slab. The New Year has also resulted in increased estate taxes. As per the new law, any estate whose worth is over $5 million dollars will be taxed at 40%, instead of 35%; which is a 5% increase. In a nutshell, the high income earners will now have to contribute more towards the government, although the other income groups will be left unaffected. 

One more significant change that is coming down the ridge is linked with the Affordable Care Act. As per the change, an individual can face a surcharge of 3.8% on unearned income that comes from interest, royalties, dividends, rent, and a few capital gains. Individuals liable to pay this tax will be the ones who gain over $200,000 per annum. Even married couples who file jointly to gain over $250,000 per year are subject to this new tax change. Due to the income threshold stated, this increase in the surcharge rate will mostly influence the high earning households.

Changes in Social Security and Medicare Taxes

This change is another topic of gossip across several media outlets. This is because the rise in tax rate is really high. The taxable ceiling for Social Security has reached up to $113,700. In case of Medicare, there is no ceiling, which means you have to pay tax irrespective of the income amount. In case you earn over $200,000, you will be liable to pay an extra 0.9% tax.

With so many significant tax changes, it can be concluded that the year of 2013 will be a bit tougher one, especially for the high income households. Although high income gainers are targeted, the impact will be seen on all Americans in general as the taxpayers will really have to be very vigilant.

Bio: Mary Carnegie is a senior broker working at a prominent mortgage company in the United States. Currently, she is working her way to be at the top of career ladder by being a part of an established finance firm such as Network Capital Funding Corp. Catch her at @maryjcarnegie or https://twitter.com/maryjcarnegie.

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