Taxes in 2013

Taxes in 2013: What Do You Need to Know?

In January of 2013, Congress passed tax legislation meant to avert the ‘fiscal cliff,’ at least from a tax standpoint. The good news is that the legislation leaves intact the income tax charitable deduction, continues the ability to deduct charitable gifts of long-term appreciated assets (real estate, stocks, mutual fund shares) at full market value, and extends the IRA Charitable Rollover.

It enacted the American Taxpayer Relief Act of 2012 (“ATRA”), a complex bill that contains numerous tax changes. Here is a brief summary of a few that you should know about.

• IRA Charitable Rollover. This popular gift opportunity was extended for 2013. It enables individuals age 70 ½+ to make tax-free gifts from their IRA directly to the Adler School. 
• Individual tax rates. The lower Bush-era income tax and capital gains tax rates were made permanent for all but the highest income taxpayers. Those with taxable incomes over $400,000 ($450,000 for married taxpayers) will have a marginal income tax rate of 39.6% and a marginal capital gains tax rate of 20%.
• Itemized Deductions. The law slightly reduces itemized deductions for high income taxpayers (by 3% for every dollar a taxpayer’s income exceeds $250,000 and $300,000 for married taxpayers). It includes deductions for state taxes and mortgage interest as well as charitable deductions.
• Estate and Gift Tax. The unprecedented exemption amount of $5M ($10M for married taxpayers), adjusted annually for inflation, was made permanent and portability remains. The marginal tax rate increased from 35% to 40%.
• Social Security Tax. The payroll tax goes back to 6.2% from 4.2% for all taxpayers.

Please contact Anthony Chimera, Vice President for Institutional Advancement via email or by calling 312-662-4031. We encourage you to talk with your advisor to learn more about the tax legislation and how it affects your unique situation.