FPO TAX ALERT: 2013 tax cutoff amounts unclear whether AGI or taxable income
January 3, 2013 Leave a comment
Though there has been compromise for both the House and Senate on the Bush Era tax cutoff levels, there remains confusion of what the subject amounts refer to. For 2013, those earning above $400k ($450k if married filing jointly) will no longer be taxed at the lower Bush era tax rates. This is the agreement as signed by both the House and the Senate. However, the current congressional language does not specify what this $400k applies to. Until clarification is provided in could be any of the below:
- Your earned income
- All of your income
- All of your income adjusted for losses and above the line deductions
- This is called your adjusted gross income (AGI)
- Your AGI plus adding back in foreign income and eliminating foreign deductions, IRA contribution deductions, student loan deductions, and higher education deductions
- This is called your modified adjusted gross income (MAGI)
- Your taxable income
This mostly harms those who in one or more of these categories would have sufficient income as it adds work and difficulty when being forced to plan your tax strategy for multiple possible outcomes in the year that has already begun.