The end of the calendar year brings some annual announcements by the Internal Revenue Service that are anticipated each year by tax professionals and taxpayers alike. One of those announcements is the inflation-adjustment of certain tax amounts for 2013. Some of the more common items that will be adjusted for inflation in 2013 include:
- The amount used to reduce the net unearned income reported on a child's return that is subject to the "kiddie tax" increases from $950 to $1,000.
- The annual exclusion from the gift tax for gifts to any person rises from $13,000 to $14,000.
- The foreign earned income exclusion goes from $95,100 to $97,600.
- For taxable years beginning in 2013, the exclusion under §135, regarding income from United States savings bonds for taxpayers who pay qualified higher education expenses, begins to phase out for modified adjusted gross income above $112,050 for joint returns and $74,700 for other returns. The exclusion is completely phased out for modified adjusted gross income of $142,050 or more for joint returns and $89,700 or more for other returns. The 2012 amounts were $109,250 and $72,850.
- For 2013, a high-deductible health plan is defined for Medical Savings Accounts (MSAs), under IRC Sec. 220(c)(2), as a health plan with an annual deductible not less than $2,150 and not more than $3,200 for self-only coverage ($4,300 and $6,450 for family coverage), and annual limit on out-of-pocket expenses (other than premiums) of $4,300 for self-only coverage ($7,850 for family coverage).
If you have any questions about these or any other annual inflation-adjusted amounts, please call Jim Gilboy at 412-697-5249 or contact your Schneider Downs Tax Advisor.
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