2013 was not a good year for rich folks. That's when tax laws designed to get more money from the wealthy went into effect.
And making matters even worse for those with bigger bank balances is that there's no universal tax definition of just how much money makes you rich!
Today's Daily Tax Tip, courtesy my slide show at Bankrate.com, looks at five higher taxes on wealthy taxpayers.
A couple of the new, higher taxes are part of Affordable Care Act, popularly (or unpopularly, depending on your political persuasion) known as Obamacare. The others are part of the American Taxpayer Relief Act of 2012, aka the fiscal cliff bill.
If you've got lots of dough or hope to, here are five new taxes from those bills that kicked in last year:
- An additional 0.9 percent Medicare payroll tax that's on top of the 1.45 all of us already have withheld from our paychecks. Watch out for this if you make more than $200,000 as a single filer or $250,000 as a married couple filing jointly.
- The 3.8 percent tax on investment income. Known as the Net Investment Income Tax, or NIIT, this requires a close look at all your holdings if you make the same amounts as apply to the added Medicare payroll tax.
Both of the first two taxes on the rich are from provisions in the health care reform law. The next three come from the fiscal cliff bill.
- A top ordinary income tax rate of 39.6 percent. This applies their when earnings are greater than $400,000 for single filers or more than $450,000 for married couples filing a joint return.
- A top capital gains tax rate of 20 percent, which also kicks in at the amounts for the top income tax bracket.
- A reduction in personal exemptions and itemized deductions if you make $250,000 as a single taxpayers, $275,000 as head of household or $300,000 if married filing jointly or a qualifying widow/widower.
More on each of these is at the official tax tip slideshow.
At least rich folks make enough to hire professional tax help. They need it, not only to work out ways to reduce their taxes, but also to ensure they comply with these new tax laws.
It's almost enough to make you not want to be rich. Almost!
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