IRS Releases New Tax Tables and Remaining Inflation Adjusted Amounts for 2013

IRS Releases New Tax Tables and Remaining Inflation Adjusted Amounts for 2013
Now that the American Taxpayer Relief Act (Pub. L. 112-240) has been signed into law, the IRS has released the remaining 2013 inflation-adjusted numbers, including the 2013 tax rates. Rev. Proc. 2013-15.

Last October, the IRS issued inflation adjusted numbers for 2013. However, because of the uncertainty about the fiscal cliff and 2013 tax rates, the IRS withheld releasing some of those numbers. Now the IRS has released Rev. Proc. 2013-15, which provides the remaining 2013 inflation-adjusted numbers, including the 2013 tax rates. In addition, a change was made for 2012 relating to the amount excludable from income for the qualified transportation fringe benefit.

2013 Tax Rates

All 2013 tax rate tables for individuals, estates, and trusts reflect the new 39.6% maximum rate, which begins at the following levels of taxable income:

MFJ or Surviving Spouse	$450,000
Head of Household	$425,000
Unmarried Individual	$400,000
Married Filing Separately	$225,000
Estate or Trust	$11,950

Adoption Credit
For tax years beginning in 2013, the credit allowed for an adoption of a child with special needs is $12,970. For tax years beginning in 2013, the maximum credit allowed for other adoptions is the amount of qualified adoption expenses up to $12,970. The available adoption credit begins to phase out for taxpayers with modified adjusted gross income in excess of $194,580 and is completely phased out for taxpayers with modified adjusted gross income of $234,580 or more.

Child Tax Credit
For tax years beginning in 2013, the value used to determine the amount of the child tax credit that may be refundable is $3,000.

Earned Income Credit
For tax years beginning in 2013, the maximum earned income credit amounts are as follows:

No Qualifying Children	$487
One Qualifying Children	$3,250
Two Qualifying Children	$5,372
Three or more Qualifying Children	$6,044

The earned income tax credit is not allowed in 2013 if the aggregate amount of certain investment income exceeds $3,300.

American Opportunity (modified Hope) Credit
For tax years beginning in 2013, the American Opportunity (modified Hope) Credit is an amount equal to 100 percent of qualified tuition and related expenses not in excess of $2,000 plus 25 percent of those expenses in excess of $2,000, but not in excess of $4,000. Accordingly, the maximum American Opportunity (modified  Hope) Credit in tax years beginning in 2013 is $2,500.

A taxpayer's modified adjusted gross income in excess of $80,000 ($160,000 for a joint return) is used to determine the reduction in the amount of the American Opportunity (modified Hope) Credit otherwise allowable. 

Lifetime Learning Credit
The Lifetime Learning Credit is a tax credit for any person who takes college classes. It provides a tax credit of 20% of tuition expenses, with a maximum of $2,000 in tax credits on the first $10,000 of college tuition expenses. You can claim the Lifetime Learning Credit on your tax return if you, your spouse, or your dependents are enrolled at an eligible educational institution and you were responsible for paying college expenses. Unlike the American Opportunity credit, you need not be in the first four years of undergraduate classes. Even if you took only one class, you may take advantage of the Lifetime Learning Credit.

A taxpayer's modified adjusted gross income in excess of $53,000 ($107,000 for a joint return) is used to determine the reduction in the amount of the Lifetime Learning Credit otherwise allowable.

Exemption Amounts for Alternative Minimum Tax
For tax years beginning in 2013, the AMT exemption amounts are:

MFJ or Surviving Spouse	$80,800
Head of Household	$51,900
Unmarried Individual	$51,900
Married Filing Separately	$40,400
Estate or Trust	$23,100

The excess taxable income above which the 28 percent tax rate applies is $89,750 for married individuals filing separate returns and $179,500 for joint returns, unmarried individuals (other than surviving spouses), and estates and trusts.

The amounts used under Code Sec. 55(d)(3) to determine the phaseout of the AMT exemption amounts begins at the following AGI levels: 

MFJ and surviving spouse	$153,900
Single individual	$115,400
Head of Household	$115,400
MFS, estates, and trusts	$76,950

ATRA permanently retains the 0% and 15% tax rates on qualified dividends and long-term capital gains, and adds a new 20% tax rate that would apply to taxpayers who fall within the new 39.6% tax bracket. Which capital gains tax rate will apply depends on what tax bracket a person is in. The new capital gains tax rates for 2013 and future years will be

Tax Bracket	Capital Gains Rate
10% and 15%	-0-%
25%, 28%, 33% or 35%	15%
39.6%	20%
Net Investment income:  MfJ                > $250K Unmarried     > $200K MfS               > $125K Additional Medicare Tax Wages & S/E income: MfJ                > $250K Unmarried     > $200K MfS               > $125K (withheld by employer)	3.8%  Medicare surtax 0.9% Medicare surtax

Standard Deduction
For tax years beginning in 2013, the standard deduction amounts are as follows:

MFJ or Surviving Spouse	$12,200
Head of Household	$8,950
Unmarried Individual	$6,100
Married Filing Separately	$6,100

The standard deduction amount for an individual who may be claimed as a dependent by another taxpayer cannot exceed the greater of $1,000, or the sum of $350 and the individual's earned income.

The additional standard deduction amount for the aged or the blind is $1,200. The additional standard deduction amount is increased to $1,500 if the individual is also unmarried and not a surviving spouse.
For tax years beginning in 2013, the applicable amounts that are used to determine the AGI phaseout of the deductions are:

MFJ or Surviving Spouse	$300,000
Head of Household	$275,000
Unmarried Individual	$250,000
Married Filing Separately	$150,000

Qualified Transportation Fringe Benefit
For tax years beginning in 2013, the monthly limitation regarding the aggregate fringe benefit exclusion amount for transportation in a commuter highway vehicle and any transit pass is $245. The monthly limitation regarding the fringe benefit exclusion amount for qualified parking is also $245.

For tax years beginning in 2012, the monthly limitation regarding the aggregate fringe benefit exclusion amount for transportation in a commuter highway vehicle and any transit pass is $240. The monthly limitation regarding the fringe benefit exclusion amount for qualified parking is also $240 for 2012.

Adoption Assistance Programs
For tax years beginning in 2013, the amount that can be excluded from an employee's gross income for the adoption of a child with special needs is $12,970. For tax years beginning in 2013, the maximum amount that can be excluded from an employee's gross income for the amounts paid or expenses incurred by an employer for qualified adoption expenses furnished pursuant to an adoption assistance program for other adoptions by the employee is $12,970. The amount excludable from an employee's gross income begins to phase out for taxpayers with modified adjusted gross income in excess of $194,580 and is completely phased out for taxpayers with modified adjusted gross income of $234,580 or more.

Personal Exemption Phaseout
For tax years beginning in 2013, the personal exemption amount is $3,900. The AGI phaseout ranges for personal exemptions are as follows:

MFJ or Surviving Spouse	$300,000  to  $422,500
Head of Household	$275,000  to  $397,500
Unmarried Individual	$250,000  to  $372,500
Married Filing Separately	$150,000  to  $211,250

Interest on Education Loans
For tax years beginning in 2013, the $2,500 maximum deduction for interest paid on qualified education loans begins to phase out for taxpayers with modified adjusted gross income in excess of $60,000 ($125,000 for joint returns), and is completely phased out for taxpayers with modified adjusted gross income of $75,000 or more ($155,000 or more for joint returns).

Unified Credit Against Estate Tax
For an estate of any decedent dying during calendar year 2013, the basic exclusion amount is $5,250,000 for determining the amount of the unified credit against estate tax under IRC §2010.

Courtesy:  Parker's Federal Tax Bulletin: January 19, 2013 - Staff Editor at Parker Tax Publishing parkertaxpublishing.com

*CIRCULAR 230 DISCLOSURE: Pursuant to Regulations Governing Practice Before the Internal Revenue Service, any tax advice contained herein is not intended or written to be used and cannot be used by a taxpayer for the purpose of avoiding tax penalties that may be imposed on the taxpayer.