Friday, October 19, 2012
2013 INFLATION ADJUSTMENTS
The Internal Revenue Service has announced the annual inflation adjustments for many tax provisions for tax year 2013.
For example –
• The maximum elective deferral for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $17,000 to $17,500.
• The catch-up contribution limit for employees aged 50 and over who participate in these types of plans remains unchanged at $5,500.
• The deduction for taxpayers making contributions to a traditional IRA is phased out for Singles and Head of Household filers who are active participants in an employer sponsored retirement plan with a Modified Adjusted Gross Income (MAGI) of between $59,000 and $69,000, up from $58,000 and $68,000 in 2012.
For Married Filing Jointly, where the spouse who makes the IRA contribution is an active participant, the phase-out range is $95,000 to $115,000, up from $92,000 to $112,000.
For contributions to the IRA of a spouse who is not an active participant the deduction is phased out if the couple’s MAGI is between $178,000 and $188,000, up from $173,000 and $183,000.
• The ROTH IRA contribution phase-out range is $178,000 to $188,000 for Married Filing Joint, up from $173,000 to $183,000 in 2012. For Single and Head of Household filers the phase-out range is $112,000 to $127,000, up from $110,000 to $125,000.
• The upper AGI limit for the Retirement Savings Contribution Credit is $59,000 for Married Filing Joint, up from $57,500 in 2012, $44,250 for Heads of Household, up from $43,125, and $29,500 Single and Married Filing Separate, up from $28,750.
• The annual gift exclusion is increased to $14,000, up from $13,000 for 2012.
• The Foreign Earned Income Exclusion is $97,600, up from $95,100 in 2012.
I will bring you additional inflation adjustments for 2013 as they are released.