Useful Income Tax and Retirement Planning Information

Wednesday, February 12 at 09:25 AM
Category: Personal Finance

There have been several major tax law changes over the past few years with staggered effective dates. These laws have significantly changed the way you may want to consider your financial situation, especially retirement planning. Here is some information that you may find helpful:

Income Tax Rate Schedules for 2013

2013 Standard Deduction

Married couples filing a joint return - $12,200
Single return filers - $6,100

2013 Personal Exemption Amount - $3,900

2013 Taxation of Dividends and Long Term Capital Gains
For taxpayers in the 10 percent and 15 percent brackets, qualifying dividends and long-term capital gains (assets held for more than a year) will be taxed at 0 percent. For those in 25 percent, 28 percent, 33 percent and 35 percent tax brackets, the tax rate on dividends and long term capital gains is 15 percent.  For those in the top 39.6 percent bracket, the tax rate is 20 percent.

2013 Medicare Surtaxes
As part of the health care reform enacted in 2010, additional Medicare surtaxes begin in 2013 for high income wage earners and high income investors. The surtaxes apply when a single taxpayer’s Modified Adjusted Gross Income (MAGI) exceeds a threshold of $200,000 or joint return filers when their MAGI exceed $250,000. 

  • For wage earners, an additional 0.9 percent Medicare surtax applies to wages (including bonuses and self-employment income) above the threshold amounts.
  • For investors, an additional 3.8 percent Medicare surtax applies to net investment income (taxable interest, dividends, capital gains, etc.) in excess of the thresholds.

Estate Taxes

Regular IRA and Roth IRA Contribution Limits


401(k) Retirement Plan Contribution Limits


Education (or Coverdell) IRAs

For 2013, the annual contribution limit is $2,000 with eligibility phase out beginning at $190,000 (for married filing jointly) and $95,000 of Adjusted Gross Income (some modifications apply). 

Annual Gift Tax Exclusion
For 2013, gifts of $14,000 and under are not subject to gift tax.

Payroll Taxes – Social Security and Medicare

  • 2013 employee wages subject to Social Security tax of 6.2 percent - $113,700.
  • 2013 employee wages subject to Medicare tax of 1.45 percent on all wages and an additional 0.9 percent on wages above $200,000 for taxpayers filing single returns.  For taxpayers filing joint returns, the additional 0.9 percent applies to wages above $250,000.
  • 2013 self employment income subject to Social Security tax of 12.4 percent - $113,700.
  • 2013 self-employment income subject to Medicare tax of 2.9 percent on all self-employment income and an additional 0.9 percent on wages above $200,000 for taxpayers filing single returns. For taxpayers filing joint returns, the additional 0.9 percent applies to wages above $250,000.

Social Security Benefits
2013 average monthly benefit for all retired workers - $1,261
2013 average monthly benefit for retired couples - $2,048
2013 maximum monthly benefit for a worker at full retirement age - $2,533

Article courtesy of Financial Wisdom.

Our firm does not provide tax or legal advice.  Be sure to consult your own tax and legal advisors before taking any action that would have tax consequences.

Investment products and services are provided by Arvest Investments, Inc., doing business as Arvest Asset Management, member FINRA/SIPC, an SEC registered investment adviser and a subsidiary of Arvest Bank. Trust services provided by Arvest Bank. Insurance products are made available through Arvest Insurance, Inc., which is registered as an insurance agency.  Insurance products are marketed through Arvest Insurance, Inc., but are underwritten by insurance companies.



 

Tags: Financial Education, Retirement, Tax
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