ON THE HORIZON
TAXES Continued from page 7
additional tax of 3.8 percent on top of regular rates; and have your capital gains be taxed at 20 percent with an additional 3.8 percent investment income rate tacked onto the capital gains tax. These increases, along with the reinstated phase-outs of itemized deduction and exemptions for high income taxpayers with income over $250,000 for single taxpayers and $300,000 for married filing joint taxpayers, can increase your tax rate by several percentage points. If you are in the higher tax bracket, you should start planning now to avoid surprises when you file your tax return next year.
PAYROLL TAXES The change to payroll taxes is probably
the first change the majority of Americans will notice in 2013. The 2 percent payroll cut in the Employee Social Security tax withholding that was enjoyed by most taxpayers during 2011 and 2012 has expired and was not renewed by Congress. Most people immediately noticed this change when their paycheck became smaller seemingly overnight.
ESTATE TAXES The estate of a decedent who dies during
2013 will have a basic exclusion amount of $5,250,000 (which is adjusted for inflation) as opposed to the $5,120,000 exclusion for estates of decedents who died in 2012. Taxpayers who own closely held businesses may plan to pass those businesses off to family members without the burden or debt associated with the estate tax. The top rate for estate and gift taxes has been increased from 35 to 40 percent. During 2012, persons with an estate in
excess of $5.12 million were making gifts in anticipation of the expected reduction of the exemption to $2 million for 2013. A new permanent estate exemption of $10 million per husband and wife, adjusted annually for inflation, has removed the uncertainty of planning for an estate tax exemption that was previously a moving target. The concept of portability is another key
provision in estate taxation that has been made permanent. In essence, if your estate is below the $10 million exemption, it is time to update your estate documents because the traditional way of forming trusts based on exemption limits is obsolete. The old “I
love you will and trust,” is back in style if you intend to leave your entire estate to your spouse. The American Taxpayer Relief Act of 2012
passed in January contains many provisions that affect taxpayers’ individual, corporate and estate tax planning - too many to fully cover here. From permanent AMT exemption rates, bonus depreciation, increased section 179 expensing limits, teacher expense deductions, to charitable contributions from your IRA instead of required minimum distribution, the bill touches on almost all areas of individual and corporate taxation in some manner. The newly enacted permanence of tax
laws will allow individuals to work on three- to five-year budgets and tax planning for their businesses and allow owners to plan for cash flow requirements with a greater sense of certainty. You should be proactive and start planning for tax day April 2014 in April 2013. RW
Richard Bell is an expert analyst on accounting strategies specific to the trucking industry. He is president of Bell & Company. He may be reached at
richard.bell@
bellandcompany.net.
Digital Magazine Now Available!
You may now view Roadwise—complete with sound effects—online within a week of distribution. Another awesome feature of this great new technology is that Web sites in the digital magazine are “live.” So, viewers may click on
a site featured in an ad and be transported directly to an advertiser’s website. Check it out:
www.mttrucking.org This is just one more service that we’re happy to offer on behalf of the Motor Carriers of Montana.
12 ROADWISE | ISSUE 1, 2013 |
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