2012 Tax Guide Update
The outstanding uncertainties about the 2012 and the 2013 tax code were resolved after we sent the 2012 “Individual Investor’s Guide to Tax Planning” (January 2012 AAII Journal) to the printer. The American Taxpayer Relief Act of 2012 kept rates unchanged for most taxpayers, but added a new maximum tax bracket and adjusted various other deductions and exemptions.
After the law was passed, we updated the tax guide on AAII.com. However, since many of you may not have seen the update online or simply prefer to have the updated information in hand as a separate article, we are providing this addendum to the tax guide. The tax guide tables with updated rates for 2013 are linked below. The fully revised tax guide can be accessed online at www.aaii.com/journal/article/the-individual-investors-guide-to-personal-tax-planning-2012.
In this article
- What’s New?
- Social Security Benefits
- Take Advantage of Lowered Marginal Rates
- Tax Software, Books and Guides
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What’s New?
The 10%, 15%, 25%, 28%, 33% and 35% federal income tax brackets that were scheduled to expire at the end of 2012 are now permanent. Single filers with adjusted gross income (AGI) above $400,000 and married couples filing jointly with AGI above $450,000, however, will pay a new, higher maximum tax rate of 39.6%.
The payroll tax cut that had been in existence for 2011 and 2012 has expired. Effective January 1, 2013, the payroll tax (for Social Security) has reverted to its full rate of 6.2% of employee wages.
To read more, please become an AAII member or CLICK HERE.
Discussion
It would be nice to have a time stamp on any document like 2012 Tax Guide Update so your readers know which "update" is the latest one, just in case there are further update.
posted 3 months ago by Charles Stadelman from California
I agree. Also would like an introductory paragraph describing the new changes. The inclusion of the embedded rate, benefits and phase-out links makes it difficult to print and reconcile with previous documents. Can we stick to one way or the other?
posted 3 months ago by Michael Lang from Illinois
We changed the headline in the online version of the tax guide in January to signify the changes. This article was included in the March issue for those who either missed the update or prefer to have it in print from.
The 2012 Tax Guide contains updated information on both 2012 and 2013 taxes and can be found at www.aaii.com/journal/article/the-individual-investors-guide-to-personal-tax-planning-2012.
This update primarily focuses on 2013 taxes, but its information matches what you will see by accessing the revised online tax guide.
Keep in mind that the print version of the January AAII Journal was sent to the printer in December, before a resolution to the fiscal cliff was reached.
-Charles
AAII
posted 3 months ago by Charles Rotblut from Illinois
Any 2012/2013 tax code changes regarding 529 educational or Traditional IRA's , tax free accounts ( ex; maximums, use of monies without penalties, federal tax deuctibility ) ? John Callahan from California
posted 3 months ago by John Callahan from California
Hi John,
I do not recall seeing anything specific regarding changes to 529 plans, but I would check with a tax professional to be sure.
-Charles
posted 3 months ago by Charles Rotblut from Illinois
IRA etc distributions are they subject to the 3.8% tax, assuming one is over the threshold ?.
posted 3 months ago by John Phelan from Florida
Regarding the 2012&2013 updated Tax Guide for
capital gains÷nd rates in the 15% bracket.
According to the Guide,I pay 0% in this bracket
for long term gains.My account said this is
incorrect,that the taxes have to be paid.
I also paid these taxes last year with a different account,saying the same thing.
Could you clarify?
posted 2 months ago by John Harburger from New York
I have not seen any comments about the government's requirement that oversea's accounts of a certain amount be disclosed on tax returns.
Any comments
posted 2 months ago by Calford Scott from New York
I assume you've realized that the maximum ROTH contribution listed in the guide for 2013 is incorrect. Should be $6500 for taxpayers over 50. Also, For anyone with taxable income (this includes qualified dividends and long term capital gains in the 15% tax bracket the qualified dividends and LTCG are not taxed. If the QD's and LTCG cause the taxable income to be in the next tax bracket, then the amount that caused the taxable income to be in the next bracket is taxed at 15%.
posted 2 months ago by Kenneth Dillman from Colorado
A small point on the taxability of Social Security.
It is true that the Social Security Administration lists the formula for ”combined income” as: Your adjusted gross income + Non-taxable interest + ½ of your Social Security benefits.
This is valid in most cases; however, the actual IRS calculation is more complicated.
A number of items must be added to one’s adjusted gross income to obtain your “provisional income”. These include ½ of your Social Security benefits, tax exempt interest, exclusions for adoption benefits, student loan interest, tuition and fees deduction, income on savings bonds used to pay higher education expenses plus several other more arcane items. (The details can be found on page 7 of IRS Publication 915).
This “provisional income” is compared to the $25/34K and $32/44K limits.
Note also that this limit is $0 if married filing separately and you live with your spouse any time during the tax year.
Ray Somers
posted 2 months ago by Raymond Somers from New Jersey
