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Important Tax Facts to Consider for the New Year

Tax changes for higher-income earners

Starting with 2013 tax year a new 39.6% federal income tax rate applies if your taxable income exceeds $400,000 (single) or $450,000 (married filing jointly). If you cross that threshold, a new 20% maximum tax rate applies on long-term capital gains and qualifying dividends. If your adjusted gross income is more than $250,000 (single) or $300,000 (married filing jointly), your personal and dependency exemptions may be reduced or eliminated, and your itemized deductions may be limited.

Higher Medicare taxes apply

If your wages exceed $200,000 (single) or $250,000 (married filing jointly), the hospital insurance (HI) portion of the payroll tax is increased by 0.9%. Also, a 3.8% Medicare contribution tax generally applies to some or all of your net investment income if your modified adjusted gross
income exceeds those
dollar thresholds.

Retirement plan contributions

You have until April 15, 2014 to make Traditional IRA, Roth IRA, or SEP IRA contributions for the 2013 tax year. (However, if you file an extension, you have until October 15, 2014 to fund a SEP IRA). Make sure that you’re taking full advantage of tax-advantaged retirement savings vehicles.

 

Tax information presented is not to be considered as tax advice and cannot be used for the purpose of avoiding tax penalties. Canandaigua National Bank & Trust does not provide tax, legal, or accounting advice. Please consult your personal tax advisor, attorney, or accountant for advice on these matters.

2014 Tax Planning Guide Blue