October 23, 2013

The IRS will be adjusting many dollar limits and benefits due to inflation. Here are some of the changes starting January 1 , 2013:

  • Deduction for business use of Auto will be 56.5 cents per mile, medical miles increase to 24 cents and charitable miles remain at 14 cents.
  • The annual exclusion for gifts increases to $14,000 per person.
  • Foreign earned income exclusion increases to $97,600.
  • Social Security benefits will increase by 1.7%.
  • The wage base for computing Social Security tax will increase to $113,700.
  • Threshold for unearned income regarding "kiddie tax" rises to $1,000.
  • The maximum IRA contribution will increase to $5,500.
  • The maximum contribution to 401K and 403B plans will increase to $17,500, for those over 50 years old the catch up amount remains $5,500.
  • The maximum contribution to a SIMPLE IRA plan will increase to $12,000.
  • For those covered by a pension plan at work, the income phase out for deductible IRA contributions increases as follows; $59,000 to $69,000 for singles and $95,000 to $115,000 for married filing joint.
Now we wait for the fun part...How much will they raise our taxes??

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).

IRS CIRCULAR 230 NOTICE:

As required by U.S. Treasury Regulations, please be advised that any written tax advice contained in this communication was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.