News & Press Releases


Attorneys with The Cavanagh Law Firm have been recognized for their achievements by Super Lawyers, Best Lawyers in America, the Martindale-Hubbell AV Peer Review Rating, specialty practice certifications.

JAN

02

2013 Tax Changes

With the passage of the American Taxpayer Relief Act, Sharon Ravenscroft finds that most of her clients, whether in the Phoenix metro area or Sun City, are interested in the following highlights: All of the individual "Bush era" tax rates are retained with the addition of a new top rate of 39.6% imposed on income over $450,000 for married taxpayers filing jointly or $400,000 for single taxpayers. The capital gains and dividend rate has increased to 20% for those taxpayers in the top bracket and remains at 15% for the middle brackets and zero for taxpayers in the 10% and 15% brackets. The estate and gift tax exclusion amount remains unified at $5 million indexed for inflation (in 2012 it was $5.12 Million) but the top rate increases from 35% to 40% effective January 1, 2013. Also, the "portability" election, allowing the surviving spouse to utilize the deceased spouse's unused exemption, has been made permanent. The threshold amount for the extra income taxes passed as part of the Healthcare Reform Legislation did not change. The employee portion of the Medicare tax, normally 1.45% of covered wages, increased by 0.9% on wages exceeding $250,000 for married taxpayers filing jointly. There is an additional Medicare tax on investment income on individuals with modified adjusted gross income greater than $250,000 for married taxpayers filing jointly. The 3.8% tax is on the lesser of the taxpayer's net investment income or the excess of the taxpayer's modified adjusted gross income in excess of $250,000 for married taxpayers filing jointly. Net investment income includes interest, dividends, annuities, royalties, rents, capital gain and passive activity trade or business income.