Here's What Your 2013 Tax Bill Will Look Like

Now that the 2012 tax season is over, it’s time to look ahead to the season for 2013 - and to begin to come to grips with just what the tax bite will be this coming year.

First, before you sit down and fire off a “happy gram” to Washington thanking Congress for passing the American Taxpayer Relief Act this past New Year’s Day – keep in mind the act doesn’t represent total relief. Not by a long shot.

What’s new?

Here’s what you have to look forward to for 2013.

Income tax rates: If you have income over $400,000 (single) or $450,000 (married), that income will now be taxed at the rate of 39.6 percent. You may recall that back in the good old days (last year) the rate was 35 percent.

In case you are interested, the 2013 IRS Early Release tables for Income Tax Withholding can be found here.

Social Security:Withholding went back up to 6.2 percent on earnings up to $113,700, previously having been 4.2 percent as a way to stimulate the economy. Reverting to the old rate, according to The Wall Street Journal, could cost some workers up to $2,425 in 2013.

Medicare surcharges: Earnings of more than $200,000 will be assessed a surcharge of nine tenths of one percent. That’s for single filers. It’s $250,000 for joint filers. There’s also a 3.8 percent surcharge on net investment income above $400,000 for individuals and above $450,000 for families.

Estate tax: The tax rate on individual estates worth more than $5 million is now 40 percent, versus 35 percent in the past, with value up to $5 million is exempt from taxes. For family estates, the first $10 million is tax exempt. This change was made permanent, all but removing uncertainty for estate planners and families.

Deductions and exemptions: The good news – standard deductions increased to $12,200 for married couples filing jointly, $8,950 for head of household, and $6,100 for those filing as single. The personal exemption has been raised to $3,900.

However, if you are considered a high-income individual, there’s also some less-than-good news. The personal exemption begins phasing out if you make $250,000 as a single filer or $300,000 for married.

Finally, the Pease provision places a limitation on all itemized deductions—including charitable donations and mortgage interest—that will eliminate up to 80 percent of deductions for taxpayers above the $250,000/$300,000 income thresholds.

Calculate it: To help you get a grasp of your own 2013 taxes, the Tax Policy Center, a nonpartisan group in Washington, has devised a calculator, available on its website at http://calculator.taxpolicycenter.org/that will help you crunch the numbers.

Of course, you might want to wait a while. Congress can be fickle and all this might change. With Congress, you just never know.