Some major tax changes have been proposed in 2013, and they may affect taxpayers across the country. For individuals who want to make sure that their financial futures are secure, it is important to stay aware of these changes so that proper measures are taken.
The most significant proposed change relates to top dividend tax rates. It has been suggested that top dividend tax rates increase from 15 percent to 44 percent, a significant increase. This proposed increase is because of the impending expiration of Bush tax cuts.
On capital gains, the current top tax rate is 15 percent. Those who fall within the 10-15 percent income bracket are not required to pay. The income cap may rise to 20 percent.
If Congress does not vote to extend certain tax cuts, dividends could possibly return to being taxed as income. Individuals who are in a higher income bracket will bear the brunt of the impact, with tax increases on dividend income that could total up to 39.6 percent.
It is also possible that investors may experience a significant increase with other investment incomes. The proposed increase bumps up the tax rate from 35 percent up to 44 percent. Other investment income includes a wide range of assets—among them trade income, dividends, interests and property net gains.
If an individual inherits a property from a relative who has passed away, that property is still subject to an estate tax. The new owner can be exempt from the estate tax if the value of the home is less than $5 million. Under the proposed tax laws, the exemption amount would drop to $1 million.
One more proposed adjustment in 2013 is a Medicare contribution tax, which is currently at 3.8 percent. This tax will be issued on a specified amount of unearned income. This change would mostly affect individuals who hold investment income in excess of a certain amount.
Seeking out a trusted financial adviser is an essential step before filing taxes. A financial adviser is able to work with clients and their tax professionals to review any tax cuts and exemptions that apply to their estates.