Tax Advice Santa Rosa – ATRA’S RETIREMENT & ESTATE PLANNING IMPACT

February 20th, 2013 → 6:36 pm @ // No Comments

What changes did the fiscal cliff deal put into play starting in 2013?

The American Taxpayer Relief Act of 2012 brought major changes to federal tax law, and it profoundly impacted retirement and estate planning. Here is an overview of seven big changes particularly relevant to retirees and/or those approaching retirement age.

Federal income tax brackets were altered. Where we once had six tax brackets, we now have seven for the foreseeable future. In addition to the 10%, 15%, 25%, 28%, 33% and 35% brackets, we now have a 39.6% top bracket for individuals with incomes greater than $400,000 and married joint filers with incomes exceeding $450,000.

Additionally, a health care surtax kicked in for high earners. In 2013, a 3.8% Medicare surtax will be levied on the lesser of either a) net investment income or b) the amount of MAGI exceeding $200,000 for single filers, $250,000 for couples filing jointly, and $125,000 for spouses filing separately. MAGI is not simply your wages; it can also include bonuses, taxable interest, RMDs taken from a traditional IRA or an employer-sponsored retirement plan, “unearned” net investment income such as dividends or net capital gains, passive income from a partnership, …Read More


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