Catching up to the new tax rates

The recent actions by Congress to avoid the fiscal cliff were predictably understated, justifying a more conservative approach to 2012 year end tax moves. The important rate changes were to add a top rate of 39.6% that will apply to taxable income over $450,000 for a married couple, $400,000 for a single. Long term capital gains rates were increased from 15 to 20% but again only for those with taxable income over $450,000. Surprisingly, qualified dividends, currently taxed at 15%, will rise to 20% but again only for those with  incomes over $450,000. The changes to the Alternative Minimum Tax involved raising the exemption from about $74,000 to $78,000 and indexing it for inflation. This will hardly be felt by those in the AMT.

 

All changes are effective for 2013.

 

Please contact the office if there are questions.

Driving the Company Car

There are many valid business reasons for having a company car. For example, most businesses will need a car at some point so that the owners or employees can visit customers, make deliveries, and travel to industry conferences. Expenses related to cars that are used 100% for business purposes are fully deductible by the business.