Passage of Fiscal Cliff Act Makes Several Modifications to Tax Laws – Los Angeles Income Tax Planning and Income Tax Litigator Attorney Bruce Givner

by Bruce Givner on January 23, 2013

With the passage and signing of the Fiscal Cliff Act, significant modifications were made to the federal tax laws.

Individual Tax Rates: High income earners now have a new top rate of 39.6%. High income earners are taxpayers with a taxable income over $225 thousand (married filing separately), $400 thousand (single), $425 thousand (head of household), or $450 thousand (married).

Capital Gains and Dividends: For individual taxpayers above the top income tax bracket threshold, a 20% tax rate now applies.

Alternative Minimum Tax: The Internal Revenue Service’s (IRS) computer system has now received its annual programming for inflation. For 2012, the exemption amounts are $78,750 for married taxpayers filing jointly and $50,600 for single filers, and the relief from AMT for nonrefundable credits is retained.

Estate and gift tax: Surprise! Surprise! The Fiscal Cliff Act set the 2013 estate and gift tax exclusion amount at $5.25 million ($10.5 million for married filers). Also, the estate tax “portability” election, which allows a surviving spouse’s exemption amount to be increased by the deceased spouse’s unused exemption amount, is made permanent. However, the top tax rate is now 40%, instead of 35%.

Generation Skipping Tax Exemption: The generation skipping tax exemption, which allows a married couple to pass assets without them being included in a child’s estate, is the same as the estate and gift tax exemption, $10.5 million for a married couple. It is also now permanent.

Annual Exclusion Gifts: The annual exclusion amount increases to $14,000 in 2013.

Givner & Kaye focuses on sophisticated income tax planning and compliance, tax litigation and procedure, estate planning, and asset protection plans for individuals and businesses in Beverly Hills, Calabasas, West Los Angeles, Hollywood, and other areas of Los Angeles, Orange, Ventura, San Bernardino, Riverside and Santa Barbara Counties. Call Los Angeles Estate Planning and Asset Protection Plan Attorneys Givner & Kaye at (310) 207-8008 today.

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