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Home > Personal Finance Center  > Preparing for Taxes > Better Look Now Because Your Taxes Are About to Increase

Preparing for Taxes

Better Look Now Because Your Taxes Are About to Increase

Now is usually the time to review all of the year-end planning tips to make sure you have done everything to cut your tax bill. But, because a slew of tax laws will be expiring this year, you should also be looking ahead to see what adjustments you will need to make in your planning and budgeting. The changes that are likely to affect most income earners next year are:

• Elimination of personal tax credits
• Alternative minimum tax exemptions revert back to the lowest threshold
• Expiration of the mortgage insurance premium deduction
• Expiration of state and local sales tax deduction
• Expiration of tuition fees deduction
• Expiration of the 2% Social Security tax reduction

And, it’s not too early to look into the tax law changes for 2013:

• End of marriage penalty equalization
• Dividends no longer taxed at capital gains rate
• The lower end capital gains rate expires
• Child credit drops to $500 from $1000
• The lower end tax rate (10%) for low income earners ends
• Lower income tax rates are eliminated
• Elimination of deduction for student loan interest
• Education IRA limit reduced to $500 from $2000

Who said they didn’t want to raise taxes on the middle class? Best to do your tax planning for 2012 and 2013 now.