Outsourced payroll services should ready to make the changes required with the new tax year and legislation. As a business owner or manager, it’s sometimes difficult to know how different legislation may affect your employees.
The Internal Revenue Service announced the annual adjustments due to inflation for tax year 2013. This includes tax rate schedules and American Taxpayer Relief Act of 2012 legislated changes.
Some of the most important tax changes for 2013 include:
- A new tax rate of almost 40% for individuals earning more than $400,00 or couples filing a joint return with income over $450,000. This begins in 2013 to be reported on tax returns filed in 2014.
- Marginal rates are unchanged from previous years at 10, 15, 25, 28, 33 and 35 percent.
- The standard deduction for 2013 will increase to $6,100 ($12,200 for joint returns). This is an increase from from $5,950 ($11,900 for married couples filing jointly) over the 2012 tax year.
- The American Taxpayer Relief Act of 2012 adds limits to deductions that are itemized for taxpayers earning over $250,000 single or $300,00 jointly.
- There is a slight increase from $4,800 to $3,900 in the personal exemption for 2013. The exemption is limited with higher incomes, and is also subject to a phase-out. Adjusted gross incomes of $250,000 ($300,000 for married couples filing jointly) are the start of the reduction and the exemption is phased out completely for earners at $372,500 ($422,500 for married couples filing jointly.)
- The Alternative Minimum Tax exemption is set by the American Taxpayer Relief Act of 2012 at $51,900 ($80,800, for married couples filing jointly) for 2013.This represents a slight increase over the 2012 exemption of $50,600 ($78,750 for married couples filing jointly).
- The maximum Earned Income Credit amount increased slightly to $6,044 for taxpayers filing jointly with 3 or more “qualifying” dependents or children. This is an increase from $5,891 for tax year 2012.
- Estates of those who pass in 2013 are subject to a slighter higher basic exclusion amount of $5,250,000, versus $5,120,000 for 2012.
- The monthly limitation for aggregate transit passes and transportation is increased to $245 from $240 for 2012. There is a retroactive increase for this amount.
More information on the impact of the American Taxpayer Relief Act of 2012 ill be published Jan.28, 2013. Other inflation adjusted items were published in October 2012 in Revenue Procedure 2012-41.
For assistance with keeping on top of the tax ramifications and how it may impact your payroll, give HR Knowledge a call or request information about our outsourced payroll and outsourced HR services.Button Text.