Fiscal Cliff - 2013 - How bad will it be ? - New England Patriots Forums

cupofjoe1962 · 10-21-2012, 12:41 AM

The following taxes are set to expire December, 31 2012.

Quote:

Many of the following expiring tax breaks may be extended or renewed by Congress, but under current law they are all set to expire on December 31, 2012. Unless extended, they will not be available for 2013 Tax Returns and the average American tax bill will increase by an estimated $3,800.

•The Bush Era Tax Cuts: If the so-called Bush-Era tax cuts from 2001 and 2003 are not extended again, taxpayers at all income levels will face a host of tax hikes:
◦Decreased Income Tax Rates: If the tax cuts are not extended, everyone's tax rate will go up. The 10% tax bracket will disappear and be replaced by a broader tax bracket with a tax rate of 15%. The tax rates of all the other tax brackets will increase, as well:
■10% bracket will increase to 15%
■25% bracket will increase to 28%
■28% bracket will increase to 31%
■33% bracket will increase to 36%
■35% bracket will increase to 39.6%
◦Child Tax Credit Increase: The popular Child Tax Credit will decrease in value from $1,000 per child to $500 per child. Additionally, the refundable portion of the credit will be less valuable.
◦Child and Dependent Care Credit Increase: The amount of the Child and Dependent Care Credit will be less than it was in 2012. Also, the credit will begin to phase out (decrease in value) at lower income levels.
◦Adoption Tax Credit Increase: The Adoption Tax Credit will fall in value from 2012 to 2013. So will the amount of employer-provided adoption assistance that is tax-free.
◦EIC Expansion: In 2013, the additional Earned Income Credit for having a 3rd child will be eliminated, making the EIC less valuable for families with 3 or more children.
◦Estate Tax Cuts: The estate tax exemption amount will decrease, while the estate tax rate will go up. Also, estate tax exemptions will no longer be portable between spouses. Furthermore, you will no longer be able to deduct any state and local estate taxes you paid from the federal estate taxes you owe. Finally, the deduction from estate taxes for "qualified family-owned business interests" will be eliminated.
◦Lowered Capital Gains Tax Rate: The tax on capital gains will go up from 15% (or 0% if your tax bracket is lower than the capital gains tax rate) to 20%.
◦Lowered Dividends Tax Rate: The tax on income from dividends will more than double from 15% to a whopping 39.6%.
◦Marriage Penalty Reduction: Congress somewhat corrected the "marriage penalty" in 2001 by increasing the 15% tax bracket for married filers to double that of unmarried filers, and by increasing the standard deduction for married filers to double that of unmarried filers. Unfortunately, the old numbers are coming back unless Congress does something.
◦Repealed Personal Exemption Phaseout (PEP): The Bush Era Tax Cuts did away with income-based phase-outs of personal exemptions. In 2013, your personal exemptions will be reduced in value or disallowed if your income is over a certain amount, depending on your filing status.
◦Repealed Limitations on Itemized Deductions (the "Pease limitation"): The Bush Era Tax Cuts also repealed the so-called "Pease limitation" on itemized deductions. On 2013 Tax Returns, the total amount of itemized deductions may be limited based on income and filing status.
◦Revised Coverdell ESA Rules: The contribution limit for Coverdell education savings accounts (ESAs) will decrease, and contribution options will be more limited.
◦Increased Student Loan Interest Deduction: The Student Loan Interest Deduction will no longer be indexed for inflation, and the maximum deductible amount will decrease.
◦Tax-Free Scholarships: In 2013, student scholarships will generally be considered taxable income.
•Payroll Tax Cut: The current 4.2% Social Security tax rate for workers is scheduled to go back up to 6.2%. Self-employed individuals will have to pay the full 12.4% as part of their Self-Employment tax.
•Income Exclusion for Canceled Debt on Principal Residence: Although mortgage debt forgiven by a lender is generally considered taxable income, the Mortgage Forgiveness Debt Relief Act allowed you to exclude from income any canceled debt on your primary residence. This lifted an enourmous tax burden off the shoulders of almost anyone going through a foreclosure or a mortgage refinancing. Unless Congress changes the law, any mortgage debt canceled in 2013 will be taxable income. This could spell trouble for anyone whose finances are already so underwater that they are facing home foreclosure.
•Employer Credit for Providing Childcare: This not only affects employers, but also the families who depend on their employers providing childcare services. But what happens if the tax credit goes away?
•Expansion of Employer-Provided Educational Assistance: Your employer can give you $5,250 tax-free to cover education expenses. That's not going to change, but that money will no longer cover graduate level education.
•American Opportunity Credit: This education credit will expire, and revert to the old Hope Credit, which is less valuable than the American Opportunity Credit.
•Credit for Prior-Year Minimum Tax Made Refundable: The refundable Credit for Prior-Year Minimum Tax provided tax relief to many middle-class families who were hit by the Alternative Minimum Tax in an earlier tax year. The credit has been of particular value to workers who exercised incentive stock options and then sold their stock for a loss. This tax credit will still exist, but it will no longer be refundable.
•In addition, the following new tax provisions of the Affordable Care Act will take effect in 2013:
◦Itemized Medical Deductions "Haircut": The Affordable Care Act will increase the AGI floor for itemized medical deductions from 7.5% to 10%. This means that you will only be able to deduct the medical expenses that exceed 10% of your adjusted gross income.
◦Medicare Payroll Tax Increase: The Affordable Care Act will raise Medicare taxes by 0.9% on income over $200,000 ($250,000 if Married Filing Jointly). This includes earned income and net investment income.
◦New Medicare Surtax on Investment Income: A new 3.8% surtax (extra tax) on net investment income will go into effect. You will only have to pay the surtax if your modified adjusted gross income (MAGI) is more than:
■$200,000 if filing Single
■$250,000 if Married filing Jointly
■$125,000 if Married filing Separately
■$200,000 if filing Head of Household

They also need to strike a deal for extended unemployment benefits.

I can't see congress, working on New Years eve, and I also can't see a deal
being stuck early. The republican's will not give the middle class a tax break
without including a higher income extention. The democrats, do not want
to do that. I see a major problem finding common ground.

Will there be a major sell of of the stock market prior to 2013, so that
people do not have to pay higher capital gains taxes?

Patsfanin Philly · 10-21-2012, 01:13 AM

http://www.efile.com/taxmageddon-201...al-cliff-2013/

<<<<
Tax-Free Scholarships: In 2013, student scholarships will generally be considered taxable income.
>>>>>>
Actually this is for a very limited set of scholarships ( National Health Service Corps) but where it really will hit college students is,

The American Opportunity Tax Credit, which provides taxpayers a tax credit of $2,500 per student will be eliminated.
The ability to deduct interest on student loans up to $2,500 will expire

Titus Pullo · 10-21-2012, 04:54 AM

Quote:

Originally Posted by cupofjoe1962

The following taxes are set to expire December, 31 2012.

They also need to strike a deal for extended unemployment benefits.

I can't see congress, working on New Years eve, and I also can't see a deal
being stuck early. The republican's will not give the middle class a tax break
without including a higher income extention. The democrats, do not want
to do that. I see a major problem finding common ground.

Will there be a major sell of of the stock market prior to 2013, so that
people do not have to pay higher capital gains taxes?

please link your cut-and-paste... it's standard message board fare.

you've been here a while, do you still not know how this thing works?

***DarrylS*** · 10-21-2012, 05:09 AM

Viral e-mail, without citing a source the imagination can run wild..

The first thing you need to do is get the House back from their second long vacation of the year.. nice "work" if you can get it.

PatriotsReign · 10-21-2012, 07:28 AM

If all the tax cuts expire, we'll immediately enter a fairly deep recession. Unemployment won't sky-rocket upward this time because businesses are about as lean as they can get, but it will increase.

Any tax increase on businesses are passed on to consumers. Public corporations can't allow their margins to decline. So we'll have reduced disposeable income along with higher prices.

PatriotsReign · 10-21-2012, 07:54 AM

For the first time in 3 years, sales & revenues fell....

Falling Revenue Dings Stocks

U.S. Companies on Track to Report Lower Sales for First Time in Three Years; Dow Falls 205 Points

Corporate Sales Seen Falling in Quarter - WSJ.com

So now the stage is being set for an even bigger, deeper recession "if" these tax cuts are allowed to expire.

In my industry, dollar sales continue to grow, but at the lowest rate in years. But overall CONSUMPTION as measured by Eq Volume is declining for the first time in 8 years.

cupofjoe1962 · 10-21-2012, 10:51 AM

Quote:

Originally Posted by Titus Pullo

please link your cut-and-paste... it's standard message board fare.

you've been here a while, do you still not know how this thing works?

Your right, sorry about that.

Here is the link.
What Is Taxmageddon and How Will the Fiscal Cliff Affect You?

There are a lot of stories out on the web about the fiscal cliff.
This link listed all of the specific taxes that would expire.

IllegalContact · 10-22-2012, 09:50 AM

but it doesn't matter......Romney will be blamed the way he is being blamed now.....even though he never had anything to do with anything

***Harry Boy*** · 10-22-2012, 09:51 AM

Anything the liberals on here don't agree with they always blame the source, they won't even try to consider that "The Source May Be Right"

PatriotsReign · 10-22-2012, 01:42 PM

How bad will it be?

As we say in Boston.....wicked bad.