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Individual Income Tax

Preparing Individual Tax Returns

Planning, calculating and paying your taxes can be quite complicated. The good news is that the professional services provided by our firm can help take a lot of stress out of tax season. We offer comprehensive tax planning and preparation services.

New Laws Make It Even More Important For You To Hire A Professional

There are new laws passed by the federal government each year that make changes to income tax preparation. The government has made a lot of sweeping changes in the past few years. When the American Taxpayer Relief Act was signed by President Obama, it reduced the amount of taxes that most Americans paid. In many cases, tax incentives were extended permanently or temporarily.

This act benefited many people in America. However, those provisions may not work to your advantage. Additionally, these changes have made it difficult for people to plan and prepare for tax season. Our firm wants you to take advantage of all of the positive aspects of this act. We can help you with areas that were affected by this law, including the following:

Tax Rates

Previous tax rates were extended for families under the Taxpayer Relief Act except for single filers whose household income is above $400,000 per year. Head of household incomes that are above $425,000 also do not qualify for the extended previous tax rates. Additionally, married couples are excluded if their joint return is greater than $450,000. These taxpayers will pay a 39.2 percent rate. However, workers are required to pay 6.2 percent for social security. This is a two percent increase. This means that American workers will actually be taking home less money.

Capital Gains And Dividends

People who are not eligible for the extended tax rates because of their income will have their capital gains and dividends taxed at 20 percent. The previous tax rate was 15 percent. Other taxpayers will continue to have their capital gains and dividends taxed at 15 percent. People whose incomes fall below the top 15 percent tax bracket will have a 0 percent taxation rate.

Alternative Minimum Tax

In order to ensure that wealthy people paid their taxes, the alternative minimum tax was established 40 years ago. However, when it was adjusted for inflation, it began to affect middle-class workers. The American Taxpayer Relief Act changed the exemption amounts and made permanent adjustments for inflation.

Estate Tax

Gift, estate and generation-skipping transfer taxes have not been consistent for years. The American Taxpayer Relief Act has set the standard for minimum gift, estate and generation-skipping. The tax is now 40 percent. In 2012, it was 35 percent.

Tax Deductions

There were a number of tax deductions that were temporarily and permanently extended. Some of the deductions that were permanently extended include the enhanced student loan interest, $1,000 child tax credit, enhanced child and dependent tax credit and enhanced adoption credit/exclusion. Some of the temporary deduction extensions include residential energy efficient property credit, higher education tuition, IRA distributions to charitable organizations, teachers classroom expenses, cancellation of indebtedness on principal residence and American Opportunity Tax Credit.

3.8 Percent Net Investment Tax

A person's net investment income is used to calculate additional taxes. This includes things such as rent, royalties, dividends and annuities. However, the income from the sale of property or business is not used to calculate net investment tax. The lesser of the adjusted gross income in the excess of $200,000 or the taxpayer's net investment income is also used to calculate net investment tax income. Keep in mind the adjusted gross income is $125,000 for a married couple who files separately and $250,000 for a married couple filing together.

0.9 Percent Medicare Tax

Higher income individuals are now required to pay an additional 0.9 percent tax for Medicare.

Retirement Savings

Americans now have an easier time saving and planning for retirement because of the American Taxpayer Relief Act. Most of the restrictions on Roth accounts have been lifted.


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