Online Tax Pros- Online Tax Help: 2013

Monday, January 7, 2013

IRS Issues Statement On Tax Legislation, Makes No Promises About Start Of Tax Season

So about that new tax deal… The Internal Revenue Service (IRS) doesn’t have much to say, so far, it seems. On their website, they have this headline, IRS Statement on Jan. 1 Tax Legislation Passed by Congress, which sounds promising, right? Until, of course, you read the statement which says this:

How some income tax preparers are
feeling waiting for the news from the IRS

"The IRS is currently reviewing the details of this week’s tax legislation and assessing what impact it will have on this year’s filing season. The IRS will soon make available additional information on when taxpayers can start filing 2012 tax returns."

No, I didn’t skip over anything. That’s the whole statement. There’s apparently not a lot to say at this point.

I don’t, of course, blame IRS for this fiasco. With the tax season officially kicking off on January 22, 2013, it couldn’t have passed anyone’s notice – even those in Congress – that giving an agency less than three weeks’ notice about how to administer returns for 140 million taxpayers (give or take a million) is, to put it mildly, optimistic.

I know what you’re thinking: the tax deal was for 2013, so what’s the hold up for 2012?

The hold up is that the tax deal did more than a few things retroactively. The most significant move was fixing the alternative minimum tax (AMT). While the focus on the AMT in the press was for 2013 and forward, for taxpayers, it was for 2012. Congress didn’t patch the AMT after 2011 which meant that the lower thresholds applied; in simple terms, an additional 30 million taxpayers were to be subject to the AMT without a fix.

This article has several other great points and you should definitely give it a read: http://www.forbes.com/sites/kellyphillipserb/2013/01/07/irs-issues-statement-on-tax-legislation-makes-no-promises-about-start-of-tax-season/

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How new tax rates will affect you in 2013

Full article at: http://www.cbsnews.com/8301-505146_162-57562381/how-new-tax-rates-will-affect-you-in-2013/

(MoneyWatch) In passing the American Taxpayer Relief Act of 2012 and averting the dreaded "fiscal cliff," Congress ensured that workers will pay more in payroll taxes and that some folks will pay more income taxes.

The good news is that many of the new tax rules are permanent, which will give individuals and business owners a welcome sense of stability. Also, these changes were better than the higher income taxes that would have burdened just about all taxpayers had the tax cuts been allowed to simply expire without further action.

Here is a summary of the new tax rules that have been made permanent by the new law:

Tax rates on ordinary taxable income. For workers with taxable income below certain levels, their tax rates will remain at 10 percent, 15 percent, 25 percent, 28 percent, 33 percent and 35 percent. For single filers with taxable income above $400,000, married filers with income over $450,000, married filing separately over $225,000 and heads of household with taxable income over $425,000, the new 39.6 percent rate will replace the 35 percent tax rate for income over these amounts. So a married couple with a taxable income of $650,000 will pay an additional $9,200 of income tax just due to this change.

Higher tax rates for long-term capital gains and dividend income. Like the income tax rates for people with incomes below certain levels, the tax rates that apply to their capital gains and dividends will remain the same. But for taxpayers with the higher incomes noted above, their rate increases from 15 percent to 20 percent. So a taxpayer with $10,000 in capital gains and $10,000 in dividend income would pay an additional $1,000 of income tax due to this change.

View the full article for these other topics as well:
Medicare surtax.
Phase-out of the personal and dependent exemptions.
Phase-out of itemized deductions.

What do you think about these changes? Leave a comment if you want to voice your opinion!

These posts are for informational use only to educate people about their online income taxes and the financial world around them. If you found this helpful, share the original article or this one, and help spread the word! With tax season rapidly approaching let us get you the best income tax return you can possibly have!