NEW YORK (MainStreet) — What a difference a year makes.
Not that 2012 was easy-peasy for tax filers. In fact, the entire U.S. tax code filled 7,500 pages last year. Compare that with a standard version of the King James Bible, which clocks in at around 1,900 pages.
But with changes and new laws stemming from the fiscal cliff deal reached Jan. 1, Americans have some homework to cover before filing their taxes this year.
What are the biggest changes? We reached out to tax professionals across the country for a look-see. Here’s what we found:
Steve Looney, CPA at Florida business law firm Dean Mead
Looney says the 2013 increases on individual income tax rates puts the maximum marginal individual tax rate to 39.6% (from 35%) for individuals having taxable income over $400,000 or for married couples filing joint returns having taxable income over $450,000.
He also warns of new so-called “stealth” taxes. “That’s the effective tax rate for certain higher-income taxpayers (individual gross income of $250,000 or joint $300,000), where rates will also be gradually increased.
“We’re seeing various provisions regarding discounts, intra-family installment loans and other gift techniques that have been targeted by the administration,” he says.
“We know the annual gift exclusion amount went from $13,000 to $14,000 in 2013. These are gifts that can be made annually to any number of donees without gift tax consequences,” he adds.
Ploucha adds that the long-term capital gains maximum rate increased to 20% from 15%, but only for taxpayers with more than $450,000 (couples) or $400,000 (singles) in taxable income. He adds that qualified dividends, taxed at 15% in 2012, will now be subject to the maximum income tax and Medicare tax rates of 39.6% and 3.8% (total 43.4%).
Shomari Hearn, a certified financial planner at the Palisades Hudson Financial Group in Scarsdale, N.Y.