Many San Francisco residents are either high earners and/or benefit from current favorable tax treatments such as long-term capital gains rate or the temporary reductions in the payroll tax for 2012. Many of these changes may expire, however.
San Francisco, CA (PRWEB) October 30, 2012
Safe Harbor CPAs (Web: safeharborcpa.com), a Top San Francisco CPA Firm, has published an alert on major tax changes that will become effective in 2013, barring legislative changes during the “lame duck” session of Congress in late, 2012. The alert published on the company’s blog summarizes potential tax changes and helps San Francisco clients plan for the future.
“We live in a turbulent tax environment,” explained Chun Wong, CPA, managing partner at Safe Harbor. “Many San Francisco residents are either high earners and/or benefit from current favorable tax treatments such as long-term capital gains rate or the temporary reductions in the payroll tax for 2012. Many of these changes may expire, however.”
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Possible Tax Changes for 2013 - The Big Picture
Among the possible tax changes for 2013, the San Francisco-based CPA firm identifies the following as most important:
Possible Expiration of the Bush Tax Cuts. This would mean that the top rates on ordinary income goes from 35% to 39.6%; the top rate on capital gains goes from 15% to 20%; and the top rate on qualified dividends jumps from 15% to 39.6%.
New Taxes from the 2010 Affordable Care Act (aka, “Obamacare”). The Medicare portion of Social Security and self-employment taxes goes up from 2.9% to 3.8% on earned income topping $200,000 ($250,000 for joint filers). There are other potential changes as well.
The 2011-2012 payroll tax cuts expire. This change would mean thjat Social Security and self-employment taxes go up by 2% on ALL earned income up to $113,700.
The AMT (Alternative Minimum Tax) is Not Patched. Under current law, those exemptions aren’t adjusted for inflation. So, every couple of years, Congress “patches” the system by temporarily raising the exemptions to where they would be if they were indexed for inflation. The AMT currently hits about 4½ million Americans — but without the “patch,” that number explodes to 33 million.
Estate Taxes Jump. Estate taxes, which currently start at 45% on estates over $5 million, will also jump to 55% on estates over just $1 million.
About Safe Harbor CPAs – a Professional CPA Firm in San Francisco
Safe Harbor CPAs specializes in accounting and tax services for individuals and businesses throughout the San Francisco Bay Area and greater California. Safe Harbor CPAs helps both individuals and businesses with tax preparation, IRS audit defense, and audited financial statements. The firm prides itself on friendly yet professional service and utilizes state-of-the-art Internet technology to provide quality customer service.
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