2013 IRS INFLATION ADJUSTMENTS

Accounting, Tax

Yesterday, the IRS announced the annual inflation adjustments for 2013. Here are a few highlights:

The annual gift tax free exclusion for gifts increased to $14,000 from $13,000.
The amount which is used to reduce net unearned income reported on a child’s return that is subject to the “kiddie tax” increased to $1,000.
The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), 457, or the federal government’s Thrift Savings Plan increased to $17,500 from $17,000.
The catch-up contribution for employees over the age of 50 and who participant in 401(k), 403(b), 457, or the federal government’s Thrift Savings Plan remains unchanged at $5,500 for 2013.
The Adjusted Gross Income (AGI) phase-out ranges for the deduction for taxpayers covered by a workplace retirement plan making contributions to a traditional IRA has increased:
Single or head of household status – AGI phase-out range is $59,000 to $69,000
Married Filing Jointly – AGI phase-out range is $95,000 to $115,000
The AGI phase-out ranges for the deduction for taxpayers making contributions to a Roth IRA has increased:
Single or head of household status – AGI phase-out range is $112,000 to $127,000
Married Filing Jointly – AGI phase-out range is $178,000 to $188,000

These inflation adjusted amounts will apply to taxable years beginning in 2013. For the complete announcements, please refer to the links below: