by: Carole Fleck
Despite uncertainty over how Congress will act, some changes are clear
Filers could see a considerable increase unless Congress and the president agree to extend tax cuts that are set to expire at the end of December. Experts say it's unlikely that lawmakers will let all the scheduled hikes take effect. Even so, you should expect some changes for next year.
• Standard deductions will rise (amounts have not been announced).
• The personal exemption will increase, reportedly to $3,900, in 2013 from $3,800 this year.
• The maximum earnings subject to the Social Security tax will increase to $113,700 in 2013 from $110,100 in 2012.
• Contributions to defined contribution plans will climb to a maximum $23,000 — $17,500 in regular contributions, up from $17,000 in 2012, plus $5,500 in catch-up contributions for those 50-plus, same as in 2012.
• There will be a higher threshold on medical deductions, meaning it will be harder to qualify. You'll only be allowed to deduct medical expenses that exceed 10 percent of your adjusted gross income (up from 7.5 percent in 2012). However, if you are 65 or older, the threshold will remain at 7.5 percent. Beginning in 2017, everyone will be subject to the 10 percent limit.
• On a related note, the maximums on deductions for long-term care insurance premiums will rise. This is a tax break that many people don't know about. But if you're age 50 to 60, the maximum you'll be able to deduct will rise to $1,360 (up from $1,310 in 2012); age 61 to 70, the maximum will increase to $3,640 (from $3,500); after 70, the limit will climb to $4,550 (from $4,370).
"That extra couple of thousand dollars you pay for premiums could push you over the limit so you can deduct your medical expenses," says Gil Charney, principal tax researcher with the H&R Block Tax Institute.
• There will be a new 3.8 percent tax on investment income for upper-income filers, as a provision of the Affordable Care Act. If you're single and earning at least $200,000 or married, filing jointly, with an income of $250,000 or more, your unearned income (interest, dividends, annuities, investment gains and the like) will be subject to the 3.8 percent tax.
• The Medicare-funding Hospital Insurance Tax, currently at 1.45 percent, will increase by 0.9 percentage point for higher earners, another provision of health reform. The increase will apply only to income that's in excess of $200,000 for single taxpayers and $250,000 for those married and filing jointly.
• Flexible Spending Accounts will have federally required contribution caps for the first time in 2013. These pre-tax accounts, used to pay for family medical expenses, will have a $2,500 annual cap. (Though there were no federal caps previously, most employers had imposed a $5,000 cap).
AARP is not my favorite group and as my membership has finally run out, I won't be renewing with them and have decided to go with one of their competitors that has the retired people's interest more at heart that AARP proved with Obamacare.
However, this was a pretty informative article and good listing of the new taxes to expect. There was not opinion offered, just the taxes as they are to take effect. So, get ready everyone. There was a comment that this is what is know for certain as of now; however we know that there is the attempt to start to tax 401K programs now, as well.
Linda; not to question your input from this article, but if all Uncle Sam was going to do was to be to TAX our 401's it might not be as bad as that article that I sent to you directly, which I was not able to post on the board. For those of you who I didn't notify, it seems that Uncle Sam is going to more or less Privatize (via the US Government) our 401's and IRA's because the people who don't work for a living, or those who don't save for the future, think that it's unfair that other retired people get more money per month to live on. So if our IRA's and 401's are put into the hands of the Government, they can, at will REDISTRIBUTE those funds as they see fit, perhaps just like those that "Borrowed" from the Social Security funds and never paid back. This is not a comfortable scenario to be watching because some of us have paid into those IRA's and 401's for a lot of years. (What they are trying to tell us, but without saying so in so many words, is that THEY ARE HAVING A HARD TIME SELLING OFF TREASURY NOTES), so the citizens should buy them and not worry about their money. Well if you compare what those notes pay to what your former investments pay - you'd likely get sick to your stomach.
Jim: There have been several proposals or suggestions on government fooling around with private pensions and retirement accounts. One was to suck all that money into the government's sticky fingers and add your 401K type accounts to your SS "account" and increase your SS payout when (and if) you get it. Some include IRAs as well. Others are putting limits on both plans contributions. One is taking the 401Ks and forcing you to pay for a government version 5% of your earnings for a $600 tax write off and give those who can't go into the plan money to do so. Not sure if the IRAs will be included initially since all that money except the account earnings were your money initially with no employer additions that are the case in most 401Ks. This has two big problem areas. First, this is government taking private property since those accounts are your private money. Second, if the funds are then going to add to the Feds "revenue" take at that time it will take a huge sum of money out of the private sector that is funding loans, corporate bonds, and equities that will really cause a huge financial downturn. It also increase the federal debt but in a "lock box" like SS. It also means there will be no private pensions and everyone will be a government ward in retirement. Real maxist move by the Demagogues and the academic nut jobs. BTW, if you ever heard a couple of these brainiacs try to explain these plans the amount of total ignorance and stupidity is really astounding! The "knowledge" of economics and finance with these clowns wouldn't fill a thimble.
Jim, a few days ago there was an article posted about the 401K's and the U.S. government proposal to privatize them. You might want to go back and check this out. Unfortunately, I did not receive an article from you about this, though. When did you send it to me, please?
I do know that a few words from various sources or various political reports etc have been hinting at this for a while but I think it's reaching a point of being very dangerous to people today. They haven't OUTRIGHT stated that if you have a large amount of money in an IRA we're going to take it from you, but just because they are not saying it, doesn't mean that it isn't on their minds.
I did call the representative of the company where I have my largest investments including two IRA's and a Roth account. He's not aware of any changes in the way they will do business and as far as he's concerned they'll send me my check every month as they have been doing. He also thinks that if the government attempted to take full control of that already saved money, "blood would be on the streets" or some sort of statement to that effect.
Lin, I sent you an attachment as opposed to a report. I'll try and find it once again, but I am not exactly sure what that may have said. I went through so much stuff today - trying to catch up once again as I'm behind.
Thanks John and Linda.
Lin & John, Re; that report that I wasn't able to post; I just looked at it and hit a LINK to this portion of it, and it is indicating that they (the FED may ask for those funds. That would spark a whole lot of interest, but I have doubts that anyone is going to part with hundreds of thousands of dollars to the Government for SAFE KEEPING when they can't even take care of their own budget. Something like this being made into a mandatory handover of our own funds would or at least COULD be catastrophic.
Now that he’s been reelected, Barack Obama will fight hard to impose his vision of a new “National Retirement System” in which ordinary Americans are forced to turn over their private retirement savings to the federal government in return for a government-controlled annuity.
It’s like ObamaCare for your retirement savings!
The liberal Pension Rights Center says the government needs to crack down on private retirement accounts because 401k plans and IRAs are unfair to poor people. This group wants the Obama administration set up a "government-sponsored program administered by the PBGC (the governments’ Pension Benefit Guarantee Corporation)." And Obama’s labor Department is following their advice. National Seniors Council representatives have even attended one meeting where Administration officials raged on how “unfair” 401(k) plans are to “the disadvantaged” and how their dream is to set up a giant government-run pension system!
The American people need to fight back.
Please “sign” the National Seniors Council petition below and tell Barack Obama to keep his hands off your private retirement savings!
This post was modified from its original form on 30 Nov, 20:47
Jim, maybe it was while you were visiting with family and you missed it, but we had put up a thread about this very thing about 2-4 days ago or so. This goes back to at least February of 2012, though.
Here is one thread from the NYPost: Dated April 2012 (401K)
and here is one from CNN Money: Dated February 2012 regarding annuities
or this one from Investors.com from November 28, 2012:
This is the one where Obama is proposing lowering the cap on where the government can start to tax 401K's, in other words, allowing them to start taxing it at the lower rate than where it currently can start to be taxed gaining more revenue for the government.
The claim is that this will only tax the more wealthy as they are the ones that have these retirement funds. My point is that is not true at all. This will hit the middle class very hard as that is where most of the people are that have invested through their employer in 401K's. So for all those middle class that thought that he was only going to take from the top 1% to share the wealth, good luck is my response as it seems he is going to start much lower than $250,000 or $200,000 for single earners.
My gosh, I had a 401K and I was only making $27,000 a year and he is going after people like that, too. My ex was making $30,000 a year and had a 401K and he would be affected, too. Now sure how Obama can keep lying to people but then they will have to feel it before they believe it.
You could be quite right Lin - It's been busy for me out here as my younger sis, whom I hadn't seen in over a year was here for about two weeks. But besides, that, I've had some events to attend and pictures to take for them, and with the results of the Election, I've had a real run for keeping my income up to par. Investors are quite fearful as to what may or may not happen with this Obama Care and so on down the line. Then, my computer was and is giving me a hard time and sometimes I'm sending things out and my computer tells me mail sent, yet the people that I sent something to are saying that they didn't get whatever it was. DRATS.
Anyway, my new computer is here, so I've just got to get it hooked up and hope for the best.
Sorry this info is getting repetitious, but regardless, it's something that is going to cause a lot of discomfort if it gets out of hand. Let's hope that if anything; it gets grandfather claused; meaning that what you've got you can keep, but what you earn and wish to invest, will be invested with the Government. In that case most of the people that voted for him will be able to "BENEFIT" by his generosity etc. Maybe now the STRICTLY LIBERAL people will not be so quick to judge the conservatives. They'll get a taste of what we don't like.???