Tax Benefits Adjusted by IRS for Inflation

The annual inflation adjustments were issued with more than 40 tax provisions for 2014.
The following are worth mentioning:

• One of the impacts from the fiscal cliff legislation is the reintroduction of the amount of itemized deductions that certain taxpayers are allowed. The limitation for 2013 will kick in on AGI levels that exceed $300,000 for joint filers and $250,000 for individuals, indexed for inflation. Income over the applicable amount will trigger an itemized deduction limitation that is the lesser of (a) 3% of the adjusted gross income above the applicable amount, or (b) 80% of the amount of the itemized deductions otherwise allowable for the taxable year.
• The tax rate of 39.6 percents affects singles whose income is over $406,750
• The standard deduction rises to $6,200 for singles and married people filing separate returns and $12,400 for married couples filing jointly. The standard deduction rises to $9,100.
• The personal exemptions rises to $3,950
• The annual exclusion for gifts remains at $14,000.

To view details on these inflation adjustments go to Revenue Procedure 2013-35, which will be published in Internal Revenue Bulletin 2013-47 on Nov. 18, 2013 at http://www.irs.gov/pub/irs-drop/rp-13-35.pdf