What Can You Do to Prepare for 2013 Taxes?

12/21/2013 7:00 AM

Tax filing season seems to roll around quicker each year. The 2013 tax year is fast coming to a close with just a few weeks left to make financial strategic decisions. Several key tax factors for 2013 are important to remember when doing year-end tax planning.

Primarily, there is a new federal income tax bracket, 39.6 percent, for any married taxpayers with over $450,000 of taxable income ($400,000 for single taxpayers). Likewise, capital gains tax rates have been adjusted, with a new 20 percent bracket for those falling into 39.6 ordinary income tax bracket.

Overall tax calculations are more complicated in 2013 compared to 2012. The Affordable Care Act incorporates a new 3.8 percent Medicare surtax, which is assessed on certain earnings for single taxpayers with adjusted gross income over $200,000 ($250,000 for joint filers).

Looking ahead to 2014, the maximum amount of Section 179 depreciation expense is slated to be lowered significantly, with 50 percent bonus depreciation going away entirely. Although there is a chance that Congress will act to extend some of these expiring depreciation provisions, taxpayers might consider this uncertainty when determining the appropriate timeframe for buying new equipment or other depreciable property. Along with purchases, the ability to contribute to qualifying charitable organizations from certain retirement plans is set to expire 12-31-2013.

Fortunately, 2013 has been a positive year for many industries; therefore, it is important to connect with your tax preparation team and discuss your specific situation, goals and needs in order to determine what decisions need to be made in the closing weeks of 2013.

Editor’s Note: James W. Hostetter Sr., CPA CFP, is the founding partner of Hostetter & Hostetter CPAs. Along with operating his family farm James has served other farmers, agri-For more information call 717-284-2468.

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