There’s an unwelcome surprise in store for taxpayers earning less than $250,000.
The bill just passed to address the fiscal cliff not only raises taxes on those making over $450,000 per year (for couples), it limits certain deductions and personal exemptions.
Those limits and exemptions kick in at the $250,000 (individually) and $300,000 (for couples) thresholds; they don’t wait until you and your spouse are making $450,000.
This Website Is For Financial Professionals Only
Examples of the deduction limits include those taken for state and local taxes, mortgage interest, and charitable contributions.
It all starts with your adjusted gross taxable income. That can be an elusive figure simply because there are different types of income.
That means the math to determine an individual taxpayer’s deduction limits can be different from person to person.
So much of your personal tax liability depends on how your income is calculated and exactly which deductions you can take that it can be quite confusing.
Confusing enough that even the experts at the Tax Policy Center have not finished the necessary updates for their online calculator.
You can find good resources here
. Another great reason to align yourself with a good tax professional and work mutually to grow your respective businesses.