Tax and Money Tip of the Week
Federal Income Tax Outlook
December 21, 2011 | No. 73
“How will taxes impact me & my business in 2012?” “What about 2013?” These are questions that we all want answered.
Congress is still working to agree on what is best and it doesn’t look like they will come to an agreement anytime soon. The best we can do is to focus on what we do know for the upcoming years, barring any congressional law changes.
2012 – For 2011, Congress provided for a 2% reduction in the payroll tax. This reduction expires on January 1, 2012. Currently, the Senate has approved a 60-day extension to this reduction, but the House does not appear to be in agreement, yet.
2013 – Additional tax increases are on the horizon as well. Here’s just a sampling of items that could increase your tax bill beginning on January 1, 2013:
– The highest tax rate increases back to 39.6%
– Capital gain tax rate goes from 15% to 20%
– Income from qualified dividends will be taxed as ordinary income (subject to the 39.6% rate). Right now, the highest rate on qualified dividends is 15%
– Return of the marriage penalty for those that file joint returns
– Return of “phase-outs” of itemized deductions for those that have high adjusted gross incomes
Changes in the tax law may or may not happen quickly. We will continue to keep a watchful eye on them.
Questions or Comments?
Mark Vitek, CPA/PFS, CFP®
…until next week.