McGovern & Greene tax specialists know that in a constantly changing tax legislation landscape, a firm needs to be proactive when consulting with their clients. We are dedicated to taking an integrated approach, looking at how taxes affect the big financial picture for you and then focusing on how we can best minimize your tax liability — while remaining in complete compliance with ever changing revenue codes.

We accomplish this through careful tax planning and by keeping up to date with both the new revenue code changes as well as changes in your financial situation.
At McGovern & Greene, our priority is our relationship with the client. Throughout the year, we are in constant contact with you, as opposed to just the few weeks prior to filing deadlines. All of our returns are prepared in house, and we never outsource our work. This level of care enables us to address your concerns on an ongoing basis and provide consultation as to how to continually minimize your liability, thereby ensuring that we utilize any opportunities in the revenue code that could prove advantageous to you.

TAX CODE UPDATE FOR JANUARY 2013

The Fiscal Cliff has been averted with the passage of the American Taxpayer Relief Act (Pub.L. 112-240), but with it comes many changes in the revenue code that will affect all taxpayers, both individuals and entities. Here at McGovern & Greene, we want all of our current and potential clients to remain up to date on the ever changing revenue code and would be happy to provide consultation as to how these changes will affect your specific and unique financial situation.

Listed below are some of the most important changes for individual filers.

• Makes permanent 2012 ordinary-income tax rates, ranging from 10% to 35%
  
• Increases the top marginal tax rate to 39.6% on taxable income in excess of the applicable threshold of $400,000 (singles), $425,000 (heads of households) or $450,000 (married filing jointly)
  
• Allows the scheduled 2013 return of the limits on certain itemized deductions and personal exemptions — setting limit thresholds of $250,000 ($300,000 married filing jointly).
  
• Makes permanent 2012 long-term capital gains rates of 0% and 15%, but increases long-term capital gains rate to 20% for taxpayers with taxable income exceeding $400,000 ($450,000 married filing jointly).
  
• Makes permanent long-term capital gains treatment for qualified dividends
  
• Makes permanent (and retroactive to Jan. 1, 2012) alternative minimum tax (AMT) relief
  
• Extends the deduction for state and local sales tax in lieu of state and local income tax
  
• Extends various child- and education-related credits and deductions
  
• Extends the ability of taxpayers age 70½ or older to make a direct tax-free rollover from an IRA to charity
  
• Extends certain home and energy-related breaks
  
• Increases the top estate tax rate to 40%
  
• Maintains the estate tax exemption amount at $5.25 million, inflation-adjusted annually

For the business filers there are also changes, listed below are some of the most beneficial tax benefits that have been extended as a product of the American Taxpayer Relief Act.

• Bonus depreciation
  
• Enhanced Section 179 expensing
  
• Accelerated depreciation for qualified leasehold, retail and
  restaurant improvements
  
• The Work Opportunity credit
  
• The research and development credit
  
• Certain energy-related breaks

Annual Inflation Adjustments have also been released for 2013 by the IRS in IR-2013-4 and further details on the adjustments can be seen at Revenue Procedure 2013-15. We will provide you with the most commonly used figures as shown in IR-2013-4 and how they have changed for 2013. Here at McGovern & Greene we would be happy to help you determine how these adjustments will affect your specific and unique financial situation.

• Beginning in tax year 2013, a new tax rate of 39.6 percent has been added for individuals whose income exceeds $400,000 ($450,000 for married taxpayers filing a joint return). The other marginal rates — 10, 15, 25, 28, 33 and 35 percent — remain the same as in prior years.
  
• The standard deduction rises to $6,100 ($12,200 for married couples filing jointly), up from $5,950 ($11,900 for married couples filing jointly) for tax year 2012.
  
• The American Taxpayer Relief Act of 2012 added a limitation for itemized deductions claimed on 2013 returns of individuals with incomes of $250,000 or more ($300,000 for married couples filing jointly).
  
• The personal exemption rises to $3,900, up from the 2012 exemption of $3,800. However beginning in 2013, the exemption is subject to a phase-out that begins with adjusted gross incomes of $250,000 ($300,000 for married couples filing jointly). It phases out completely at $372,500 ($422,500 for married couples filing jointly.)
  
• The Alternative Minimum Tax exemption amount for tax year 2013 is $51,900 ($80,800, for married couples filing jointly), set by the American Taxpayer Relief Act of 2012, which indexes future amounts for inflation. The 2012 exemption amount was $50,600 ($78,750 for married couples filing jointly). This measure removes the need for an annual "AMT Patch."
  
• The maximum Earned Income Credit amount is $6,044 for taxpayers filing jointly who have 3 or more qualifying children, up from a total of $5,891 for tax year 2012.
  
• Estates of decedents who die during 2013 have a basic exclusion amount of $5,250,000, up from a total of $5,120,000 for estates of decedents who died in 2012.
  
• For tax year 2013, the monthly limitation regarding the aggregate fringe benefit exclusion amount for transit passes and transportation in a commuter highway vehicle is $245, up from $240 for tax year 2012 (the legislation provided a retroactive increase from the $125 limit that had been in place although the mechanism of this refund has not been released).

Additionally Revenue Procedure 2013-15 adjusts the amount for the adoption credit, the child tax credit, the American opportunity credit, the lifetime learning credit, and others.

McGovern & Greene would be happy to provide consultation as to how these changes and adjustments will affect your specific and unique financial situation.