How Much Did My Taxes Increase In 2013?

Fiscal cliff deal raises taxes on 77% of Americans

By Tami Luhby @CNNMoneyJanuary 3, 2013: 5:12 PM ET

Click on the chart to see how much more you'll pay in taxes.

NEW YORK (CNNMoney)

More than three in four Americans will pay higher taxes for 2013, thanks to the fiscal cliff deal passed in Congress on New Year's Day.

Over 77% of filers will pay more, according to the Tax Policy Center. The average increase is expected to be $1,257, but that figure belies the wide disparity in impact.

Those making less than $10,000 a year will pay $68 more in federal taxes, on average, while those making between $50,000 and $75,000 will see an $822 jump. Wealthy filers with incomes of $1 million or more will see a $170,341 spike, on average.

The ending of the payroll tax break will have the broadest reach, with most of the nation's 160 million workers seeing smaller paychecks. Wage earners will have to pay the full 6.2% in payroll taxes, up from the 4.2% they'd been paying for the past two years. This means those earning $30,000 annually will get $50 a month less in their paychecks, while those making $113,700 (the maximum amount subject to payroll tax) will see $189.50 less each month.
Related: No word on tax refunds

The rich will also get hit by the increase in the tax rate to 39.6% for couples with adjusted gross incomes above $450,000, or single filers above $400,000. Millionaires will pay $122,560 more a year just from this provision alone, according to the Tax Policy Center. And they'll have to pay a 20% levy on capital gains and dividends, up from 15%.
                                        
Americans, mainly wealthy ones, will also pay more in tax because of a variety of other measures both in the fiscal cliff deal and in President Obama's health care reform law. Joint filers making more than $300,000, or single taxpayers earning more than $250,000, will see their personal exemption and itemized deductions limited. And well-off taxpayers will pay 0.9% more on their family income above $250,000 for couples, or $200,000 for singles. And some will pay 3.8% on certain levels of investment income.

A Great Article From the Tax Foundation on Fiscal Cliff Deal

Details of the Fiscal Cliff Tax Deal

January 01, 2013

By

Joseph Henchman

At 2AM this morning, the Senate passed H.R. 8, the American Taxpayer Relief Act of 2012, by a vote of 89-8. Voting no were Bennet (D-CO), Carper (D-DE), Grassley (R-IA), Harkin (D-IA), Lee (R-UT), Paul (R-KY), Rubio (R-FL), and Shelby (R-AL). Not voting were DeMint (R-SC), Kirk (R-IL), and Lautenberg (D-NJ). TaxProfBlog has the text of Senate-passed bill (157 pages). The Joint Committee on Taxation (JCT) has also produced a revenue estimate, as has the Congressional Budget Office (CBO). The House of Representatives is expected to vote on the bill today sometime. (UPDATE: Just after 11pm, the House of Representatives voted 257-167 to adopt the Senate bill without amendment.)
Because the tax cuts were scheduled to expire anyway, JCT scores it as a $3.9 trillion tax cut over 10 years; compared to current policy, however, it is a $620 billion tax increase (plus $15 billion in spending cuts according to JCT, or minus $57 billion in spending increases according to CBO). (More details on the fiscal cliff and the 10-year budget estimates here.)
Key elements of the deal:

• Retains the 10 percent, 15 percent, 25 percent, and 28 percent income tax brackets from the Bush tax cuts permanently
• Retains the 33 percent and 35 percent income tax brackets from the Bush tax cuts for taxable income under $400,000 (single), $425,000 (head of household), and $450,000 (joint filers). Imposes 39.6 percent tax rate on income above this level.
• Phases out personal exemptions (PEP) for adjusted gross income over $250,000 (single), $275,000 (head of household) and $300,000 (joint filers)
• Limits itemized deductions (Pease) for adjusted gross income over $250,000 (single), $275,000 (head of household) and $300,000 (joint filers)
• Capital gains tax and dividends tax will be 20 percent for taxpayers with income over $400,000 (single) and $450,000 (joint filers). This does not include the new 3.8 percent health care tax on investment income above $200,000 (single) and $250,000 (joint filers) in adjusted gross income, so the top rate for capital gains and dividends will be 23.8 percent. For lower income levels, the tax will be 0 percent, 15 percent, or 18.8 percent.
• Continues setting the standard deduction for joint filers at 2 times single filers (would have otherwise reverted to 1.67 times single filers)
• Permanently sets Alternative Minimum Tax (AMT) exemption at $50,600 (single) and $78,750 (joint filers) for 2012 and adjusts for inflation thereafter
• One year extension of 50 percent bonus depreciation rules
• Extends American Opportunity Tax Credit (education) through 2017
• Extends the various “extenders” tax incentives through 2013
• Retains the doubled child tax credit ($1,000) permanently, its refundable portion through 2017, and the expanded earned income tax credit (EITC) through 2017
• Raises estate and gift tax to 40 percent, but above the current exemption level (~$5.12 million) and adjusted for inflation in future years
• Extends emergency unemployment compensation (EUC) and extended benefits (EB) unemployment insurance program through January 1, 2014
• One year “doc fix” for Medicare payment physicians
• Extends existing agricultural programs for one year (preventing the “dairy cliff”)
• Postpones sequester by two months; will now occur on March 27, 2013 (same day as the continuing resolution expires)
• Permits 401(k) plan participants to convert their plan to a Roth plan, under which contributions are taxed going in but withdrawals are tax-free. The result is a short-term revenue boost now and more tax-free savings accounts.
• Ends 2 percent payroll tax cut; taxpayers should expect greater FICA withholding from their next paycheck.
• No action on the debt ceiling. The U.S. hit the debt ceiling on New Year's Eve, although Treasury actions to juggle books and defer payments will forestall default until late February. Biden has reportedly pledged to liberal Democrats that the President will not negotiate over the debt ceiling.

Additionally, the House is considering a bill to cancel the scheduled congressional pay increase (from $174,000 to $174,900) and to continue the 2-year non-military federal employee pay freeze for another year. President Obama issued an executive order on December 27 to raise pay by 0.5 percent beginning April 2013.
UPDATE: There's a rumor that the Senate bill has a "benefit recapture" provision, applying the 35% rate to all income for high-income individuals. This is not true. The alleged provision, on page 7 of the Senate bill, exists because the new 39.6% top rate is not in the tables where it ought to be, but in a different section. The provision thus states that the 35% rate applies to all taxable income from the dollar amount where the highest rate bracket begins for each filing category, up to the threshold for the 39.6% rate. It also clarifies that the 39.6% rate applies to taxable income. There is no provision stating that lower amounts of income are subject to the 35% rate. (They presumably have different rate tables because 10-15-25-28-33-35 rate bracket levels inflation-adjust from a different base year than the new 39.6% rate bracket level, which will inflation-adjust from 2013.)

Table: 2013 Taxable Income Brackets and Rates Under H.R. 8 as Amended by Senate
Rate	Single Filers	Married Joint Filers	Head of Household Filers
10%	>$0	>$0	>$0
15%	>$8,950	>$17,900	>$12,750
25%	>$36,250	>$72,500	>$48,600
28%	>$87,850	>$146,400	>$125,450
33%	>$183,250	>$223,050	>$203,150
35%	>$398,350	>$398,350	>$398,350
39.6%	>$400,000+	>$450,000+	>$425,000+

Table: Major U.S. Tax Provisions, 2001-2013
Tax Category	2000	2001	2002	2003	2004-2005	2006-2007	2008-2009	2010-2012	2013*
Income Tax Brackets	-- 15% 28% 31% 36% 39.6%	10% 15% 27.5% 30.5% 35.5% 39.1%	10% 15% 27% 30% 35% 38.6%	10% 15% 25% 28% 33% 35%					10% 15% 25% 28% 33% 35% 39.6%**
Capital Gains Tax (max)	20%			16.7%	15%				23.8%***
Dividend Tax (max)	39.6%	39.1%	38.6%	15%					23.8%***
PEP & Pease	Full					Minus 1/3	Minus 2/3	Repealed	Full****
Marriage Penalty	Joint Filer = 1.67 x Single			Joint Filer = 2 x Single					Joint Filer = 2 x Single
Child Tax Credit	$500	$600		$1,000					$1,000
Source: Tax Foundation *Under fiscal cliff tax deal passed by the Senate on January 1, 2013. **Applies to taxable income over $400,000 (single), $425,000 (head of household), and $450,000 (joint filers) ***Capital gains tax and dividends tax will be 23.8 percent for taxpayers in the 39.6 percenttax bracket. This includes the 20 percent top tax rate and the new (for 2013) 3.8 percent health care tax on investment income on adjusted gross income over $200,000 (single) and $250,000 (joint filers). For lower income levels, the tax will be 0 percent, 15 percent, or 18.8 percent. ****Applies to tax filers with adjusted gross income over $250,000 (single), $275,000 (head of household) and $300,000 (joint filers).

Table: Estate Tax Rates & Exemption Levels, 2000-2013
	Estate tax (top rate)	Estate tax exemption
2000	55%	$675,000
2001	55%
2002	50%	$1,000,000
2003	49%
2004	48%	$1,500,000
2005	47%
2006	46%	$2,000,000
2007	45%
2008
2009		$3,500,000
2010	Repealed	Repealed
2010-2012	35%	$5,120,000
2013*	40%	$5,120,000 (or inflation-adjusted level)
Source: Tax Foundation; Internal Revenue Service. *Under fiscal cliff tax deal passed by the Senate on January 1, 2013.

Bigger Tax Deductions for Portland Business

Portland increases biz owners tax deductions

Portland Business Journal by Andy Giegerich , Business Journal staff writer

Date: Wednesday, December 5, 2012, 2:35pm PST

 

 

Andy Giegerich

Business Journal staff writer- Portland Business Journal

 

Thanks to a Portland tax amnesty program, small business owners will enjoy heartier deductions on their next round of returns.

The Portland City Council voted Wednesday to increase the “business owners’ compensation deduction” on future tax returns from $88,500 to $90,500 (it’s item 1391 on the Council’s agenda). The benefit will be funded by the nearly $1 million Portland collected from 140 businesses during a tax amnesty offering earlier this year.

That 60-day program waived penalties for not filing and reduced businesses’ interest due by 50 percent.

“When our small businesses have more after-tax dollars available, they can use those dollars to expand their businesses and hire new employees,” said Commissioner Nick Fish, who co-sponsored the measure along with Mayor Sam Adams and Commissioner Dan Saltzman. “It sends the right signal that we want to support our local small businesses.”
The vote was 4-0. Saltzman wasn't available when the Council finalized its decision.

"Fiscal Cliff" and "Taxmageddon" Explanation

Here are a couple great couple quick explanations to what the "Fiscal Cliff" or as some call "Taxmageddon" are referring to.

 

Introduction

On December 31, 2012, a large swath of the federal income tax code is scheduled to expire, an event which has come to be known as the “fiscal cliff.” Among the expiring provisions are the 2001 and 2003 tax cuts enacted under President Bush, a compromise on the estate tax, a “patch” in the Alternative Minimum Tax (AMT) reducing its impact, the temporary 2 percent payroll tax holiday, increased business expensing, and the “extenders” package of miscellaneous tax deductions. On January 1, 2013, five taxes enacted as part of the Patient Protection and Affordable Care Act (PPACA)—popularly referred to as Obamacare—also take effect, along with sequester spending reductions of $109 billion due to the failure of the “supercommittee” to reach consensus on budget reductions. Taken together this “fiscal cliff,” or “Taxmageddon,” could potentially reduce economic output by hundreds of billions of dollars.

Congress and the President will have little time to rest after the New Year: in late February, the U.S. government will hit the debt ceiling, exhausting its ability to borrow to finance ongoing spending without an increase by Congress. Finally, the federal government’s continuing resolution appropriating spending expires on March 27, 2013.

The fiscal cliff is the culmination of a decade of “temporary” tax
 and budget bills that have postponed resolution of key policy differences. Should the tax code be used to heavily promote income distribution or aim instead to raise revenue in the least distortive manner possible? How large should federal spending be? Should PPACA be modified or repealed? Should there be a federal estate tax and if so, at what level? Should the payroll tax be reduced and if so, how should we fund Social Security and Medicare? What should Social Security, Medicare, and Medicaid look like as the population ages?

http://taxfoundation.org/article/fiscal-cliff-primer


The Fiscal Cliff Explained

“Fiscal cliff” is the popular shorthand term used to describe the conundrum that the U.S. government will face at the end of 2012, when the terms of the Budget Control Act of 2011 are scheduled to go into effect.
Among the laws set to change at midnight on December 31, 2012, are the end of last year’s temporary payroll tax cuts (resulting in a 2% tax increase for workers), the end of certain tax breaks for businesses, shifts in the alternative minimum tax that would take a larger bite, the end of the tax cuts from 2001-2003, and the beginning of taxes related to President Obama’s health care law. At the same time, the spending cuts agreed upon as part of the debt ceiling deal of 2011 will begin to go into effect. According to Barron's, over 1,000 government programs - including the defense budget and Medicare are in line for "deep, automatic cuts."
In dealing with the fiscal cliff, U.S. lawmakers have a choice among three options, none of which are particularly attractive:

• They can let the current policy scheduled for the beginning of 2013 – which features a number of tax increases and spending cuts that are expected to weigh heavily on growth and possibly drive the economy back into a recession – go into effect. The plus side: the deficit, as a percentage of GDP, would be cut in half.
• They can cancel some or all of the scheduled tax increases and spending cuts, which would add to the deficit and increase the odds that the United States could face a crisis similar to that which is occurring in Europe. The flip side of this, of course, is that the United States' debt will continue to grow.
• They could take a middle course, opting for an approach that would address the budget issues to a limited extent, but that would have a more modest impact on growth.

http://bonds.about.com/od/Issues-in-the-News/a/What-Is-The-Fiscal-Cliff.htm

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Important Dates Sept 15th - Deadline for Partnerships & Corporations Sept 15th - 3rd Quarter Estimated Tax Payment October 15th - Deadline for Individual Tax Returns

This is taken directly off of Management & Finance of the city of Portland. If you are or were a real estate agent during 2008-2011 then you may be due a refund on your city and county tax returns. Also the clock is ticking, you have until the end of next month before time runs out for tax year 2008. 

Proctor & Rulien, PC v. City of Portland Decision - Filing Guidance for Real Estate Brokers - Printable Version

RE: Proctor & Rulien, PC v. City of Portland

Date: May 11, 2012

The Revenue Bureau adopted Interim Administrative Rule 280.12-1 (Extension of Time to File Amended Returns Pursuant to the Decision in the Proctor Case).This rule extends the statute for filing amended returns for the City of Portland Business License Taxes paid on the taxable year ending 12/31/2008 until July 31, 2012.

Date: April 23, 2012

The Revenue Bureau will issue guidance soon regarding the process for claiming refunds and the extension of the statute of limitations on the 2008 tax year. The 60 day period for filing amended returns has not started yet. It will be announced when the above guidance is issued.

The case has been remanded back to the Circuit Court. No trial date has been set.

Date:  March 13, 2012

On March 8, 2012 the Oregon Supreme Court denied the City of Portland’s Petition for Review of the September 8, 2011 opinion of the Oregon Court of Appeals.  The Revenue Bureau is meeting with the City Attorney’s office to determine what the next steps are regarding the Appeals Court remanding the case back to the Circuit Court.  After this meeting additional guidance may be provided regarding the adjustment of previously filed returns (amended returns, refund claims, etc.). The guidance previously provided for the 2010 and 2011 tax years regarding the City of Portland portion of the combined tax return should be followed if you are a broker who engages in professional real estate activity only as an agent of a principal real estate broker.  Additional information may be provided by the end of March.

Date: November 10, 2011

Today the City of Portland filed with the Oregon Supreme Court a Petition for Review of the September 8, 2011 opinion of the Oregon Court of Appeals. The Oregon Supreme Court will either accept or deny the petition. Once we learn of that decision, we will post continuing guidance.

Date: October 12, 2011

The City of Portland has been granted an extension by the Oregon Supreme Court until November 10, 2011 to file a Petition for Review of the recent opinion of the Oregon Court of Appeals.

The Revenue Bureau is aware that real estate brokers and tax preparers want guidance on filing current returns and on filing amended returns for 2008, 2009 and 2010. The Revenue Bureau has determined the following:

1. Current year returns (2010 tax year) may be filed without payment of the City of Portland Business License Tax by real estate brokers engaging in professional real estate activity only as an agent of a principal broker until such time that it may potentially become due. The Revenue Bureau agrees that no penalty will accrue in such cases because of the pending appeal. However, interest may be assessed. This same guidance will apply to the 2011 tax year if the appeal has not been decided by April 15, 2012.
2. The Revenue Bureau will extend the statute of limitations for real estate brokers who may have paid tax in 2008, 2009 and 2010. It will not be necessary for real estate  brokers to file amended returns for those yearsat this time. Once a decision is made regarding our petition for review or a decision by the Oregon Supreme Court, the Revenue Bureau will, by written policy, issue specific guidelines regarding what is required in the event a refund is due to the taxpayer. The Bureau will allow a period of time to file of not less than 60 days once a final decision by the court(s) has been made. 

The Revenue Bureau will only accept returns without Business License Tax payment from “an individual licensed as a real estate broker who engages in professional real estate activity only as an agent of a principal real estate broker.” (quoted from ORS 696.365). If you are claiming this, you must indicate on the form the name of the principal broker you are an agent for as verification.

Individuals licensed as a principal real estate broker are not exempt under ORS 696.365. Additionally, corporations or tax entities other than individuals are not exempt under this law as the corporation is not the licensee (per ORS 696.020). Prior court cases have established the taxation of a filing entity even though individual or corporate owners of the filing entity are tax exempt.

http://www.portlandonline.com/omf/index.cfm?a=389012&c=44311

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