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WILL PAYROLL TAXES SPOIL THE TAX DEAL?

  • By Lauri Paxton
  • 14 Jan, 2013
With the fiscal cliff behind us, many wonder what’s in store now. For most, it will mean smaller paychecks and less money to spend jump starting the economy. Here are a few highlights:
  • Employees will see smaller paychecks as a result of a 2% increase to pay an additional portion of their share of social security.
  • A 0.9% Medicare surtax, passed in 2010 with health care reform but goes into effect in 2013. For employee’s wages exceeding $200,000 the surtax will be withheld by the employer for the employee’s share of Medicare tax.
  • The estate and gift exemption increases to $5,250 and the tax rate jumps to 40%. The gift tax exclusion rises to $14,000 per done.
  • The Bush Income tax cuts have been eliminated and tax rates on high incomers increase for the first time since 1993.
  • Personal exemptions increase to $3,900 for filers and their dependents.
  • Pay ins to health flexible spending accounts are capped at $2,500
  • Standard mileage deduction is 56.5 cents.
More changes are sure to come from the IRS. If you are uncertain about various code changes, feel free to contact Paxton Bookkeeping and Tax Services.
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