Don’t forget: The coming tax season could prove taxing
By Dian Vujovich
Before you begin spending this holiday season be mindful that Uncle Sam will be picking your pockets for more when it comes time to pay your 2013 tax bill. How’s that for a buzz kill right before the hap-hap-happiest time of the year approaches.
Sad but true, the days of the 15 percent long-term tax on capital gains and qualified dividends are gone. Instead, that tax has increased to 23.8 percent, including the 3.8 percent Medicare surtax. On short-term gains and non-qualified dividends the rate has moved up by about that same 8 percent too: From the 25 percent we knew in 2012 to 43.4 percent in 2013, according to Fidelity.
And that’s only a few of the changes headed everyone’s way.
Have an adjusted gross income (AGI) of over $372,501 for single earners and $422,501 for couples and gone are personal exemptions.
Feeling more ouch will no doubt be those with taxable incomes of more than $400,000 for single filers and $450,000 for couples: The top marginal ordinary income tax rate in this case has moved from 35 percent to 43.4 percent (including the Medicare surtax).
Don’t earn quite that much—or between $250-$300,000 depending upon filing status— and you may feel a pinch as there have been reductions for this group in personal exemptions and itemized reductions.
Of course all of this tax stuff is hugely confusing. Weeding through it is no-doubt best done by a qualified tax preparer.
But ’till then, Fidelity has an easy-to-navigate guide that’s worth an online read.
It’s titled “The 2013 tax changes you can expect, and what you can do about them” and can be found at
Before visiting, remember that income in Uncle Sam’s world comes in four different flavors: There’s gross income (that’s everything coming in and added together); adjusted gross income (AGI) is income minus deductions; modified adjusted gross income (MAGI) more confusing reducing still; and taxable income—the figure our tax bill is based on.
Fortunately, spending doesn’t come with any of those implications. So forget about the tax implications and go ahead and enjoy a spending spree–or two or three!
To read more articles, please visit the column archive.