Money Fix: New income tax changes
The winter blues may be a bit bluer as you prepare to file your taxes. Numerous changes came into play in 2013. What's new? Plenty.
1. If you're single with income over $200,000 or married filing jointly on $250,000 or more, there's a 3.8 percent investment tax on passive income such as dividends, interest and capital gains. Those in this income category also face a 0.9 percent Medicare tax.
2. For top earners exceeding certain thresholds, federal ordinary income tax rates jumped from 35 percent to 39.6 percent.
3. It's tougher for those under age 65 to deduct unreimbursed medical expenses. They must exceed 10 percent of adjusted gross income, up from 7.5 percent.
4. Long-term capital-gains tax increased from 15 percent to 20 percent for federal taxes. "If you had a capital gain of $100,000 and are in the top rate, the additional tax cost would come to $5,000," explains Jonathan Gassman, CEO of The Gassman Financial Group in Manhattan.
5. Legally married same-sex couples will be treated as married for federal taxes.
6. There are new rules for personal exemptions and itemized deductions, with some deductions phased out if your income exceeds certain thresholds.
7. One bright spot: There's still a nonbusiness energy property credit of up to $500 available for certain energy-efficient improvements, says Dan Geyer, tax manager with WeiserMazars in Woodbury.
With higher rates and lower deductions, says Michael Trager of Trager, Kevy & Trager in Mineola, "it's not a pretty picture."