Tax Tips for Married Filing Joint Taxpayers in 2013

Tax tips for Married Filing Joint Taxpayers in 2013

By Tim Frye

Funny. You’d think one would remember being shoved off a cliff. Whether this cliff be a fiscal or a literal one. Apparently, after years of deliberation from congress, three hours before the midnight deadline of January 1st, the House approved a deal. Technically, the establishment rode us right “over the cliff, “ considering the details of the deal were not finalized until after the deadline of the new year. The freshly minted portions of the tax code will of course be retroactively applied to the first minute and day of 2013. Now let’s get to the important part. How does this affect your client? What advice can you give to your client to show them you are voraciously researching the aspects of this deal and using that knowledge to lower their soon to be gargantuate tax bill.

For the tax year of 2013, the tax code will go through more changes than a weightlifter’s mood on steroids. One of the groups of taxpayers that will be hit the hardest by the new provisions of the agreement is those households that file MFJ while reporting two high incomes. Lets dive into the aspects and effects of this deal on those filing jointly and making pretty good scratch.

alt

Tax Brackets for Single Filers

There must be a developing conspiracy directed at those who choose to tie the knot and walk the line of morality and decency. Being single has never been so in vogue. New for 2013, those taxpayers who report themselves as single to the IRS and have an income exceeding the designated threshold of $200,000 will be subjected to a rapid acceleration of their federal tax rates on wages and investments. These increases will weigh heavily on married couples more than single filers, and this is increasingly true if both of the spouses are employed and report capital gains as well as dividend income.

The provision in the new law allows for multiple thresholds to kick in for married filers at a mere $50,000 past where it is implemented for the single filer. The married filers reporting income of at least $300,000 will also be subject to the returning phase outs of the value of deductions and exemptions that were reinstituted for 2013.

Tax Brackets Change in 2013

Here are the specifics. There are three of these aforementioned thresholds that are now effecting taxpayers currently. Taxable income in excess of $450,000 a year for MFJ and $400,000 for single filers is the point at which the new(but old) income tax bracket will rear its brutal mug at the bloated rate of 39.6%, from 35%. One more surprise. At these levels of taxable income your client will be subject to the new 20% rate applicable to capital gains and dividends, where as the bracket used to stand at 15% throughout the previous decade.

The second threshold begins at the AGI point of $250,000 for married couples, while it sits at $200,000 for single filers. That is not much of a gap if you ask me. These are the bowies that mark the beginnning of the end for your clients investment vessels. An extra 3.8% surtax is levied on investment income from these points as well as an additional 0.9% on your clients wages.

And then there are the phaseouts placed on the value of deductions and personal exemptions which are $300,000 on those filing jointly and $250,000 for those filing lonely. At those Adjusted Gross Income levels your client’s itemized deductions and personal exemptions will matter less and less until they matter not at all. These provisions were enacted as a compartment that helped finance the enormous expansion of medical coverage policies that were championed by the king himself, Obama.

Helping My Client Avoid Paying Higher Taxes

Here’s the bottom line. As I have I am sure irritatingly stated one too many times already, you will not progress as a tax preparer if you don’t make an effort to understand the current and future ramifications of the constant changes in the tax code. And the year 2013 is not the year you wanna decide to take a long vacation from wisdom and think you know everything there is to know about taxes. With the knowledge of the new provisions of the tax code, you are able to offer a classier, higher grade, more accountant style servicing to your client. This means you can offer them advice that conforms to their specific life situations while corresponding to the governments tactics. Oh, and one more thing, last time I checked ACCOUNTANTS bill just a tad more than the little baby tax preparer.

facebookShare on Facebook
TwitterTweet
PinterestSave

You may also like

alt

Tax Preparer Salary in California

Tax Preparer Salary in California

By Tim Frye

Are you looking to make a good salary doing taxes in California?  Well, technically, a salary is not even possible.  When you prepare taxes you generally are working on a commission or hourly rate, depending on the company you are with or if you work for yourself.  Set salary jobs are not part of tax preparation like they are in accounting.  This article will specify the ways in which tax preparers make their money and how payment is different from a salaried job.

alt

alt

Tips for Starting a Home Based Tax Business

Tips for Starting a Home Based Tax Business

By Tim Frye

The art of starting a home based tax business has been puzzle for many tax preparers.  And as the tentacles of the IRS grow more invasive and pervasive than ever, this task is not getting any easier.  Now, when you are preparing taxes out of a home office, and are expecting to do more than a few tax returns a year from home, you are going to be held to higher level of standards then your local Avon wife who is slanging make up next door.  The IRS doesn’t play man, so in this article we will give a few tips for starting a home based tax business without getting on the government’s’bad side.

 alt

How Do I Avoid an IRS Audit?

How Do I Avoid an IRS Audit?

How Do I Avoid an IRS Audit?

By Tim Frye

There are some things in life that you simply can go without experiencing. Compound fractures, deep knife wounds, the expiration of loved ones. Oh, and IRS audits would probably sit top on that list for the majority of people, unless you are a sadist and enjoy excrutiating pain. The IRS audit, or “examination” as they have now reclassified it, is about as painful as getting a gangrenous appendix ripped from your insides without the benefit of anesthesia. So, in an effort to save your client from this horrific ordeal, Pronto Education would like to offer a few tidbits of advice as to how to assist the taxpayer in the avoidance of this treachery.

alt

What is the Section 179 Deduction?

What is the Section 179 Deduction?

By Tim Frye

As the years go by, it seems small businesses are getting their pockets squeezed harder than the guy who owes Uncle Pauly $30 large from money lining the Celtics a few years back and not making good on his debt. And with Obama in office, the invasive procedures of the alphabet soup companies like the IRS and EPA have expanded and grown more unrelenting than ever. The government stated clearly that they would leave those taxpayers making under $250,000 alone. For the most part, they have remained true to their word. Now, there of course is always another side to this coin. Those individuals and businesses that are reporting income in excess of this threshold are getting slapped around pretty good. Consequently, as the tax rates for income and investments that land beyond the designation climb higher, the deductions accessible to the affected taxpayer are more valuable than ever. The Section 179 is one of these vital deductions that has been revised recently to assist small businesses. Section 179 of the tax code permits businesses to deduct the entire purchase price of qualifying equipment and/or software purchased during the year. This article will seek to articulate the specifics of the Section 179 deduction.

alt