Stay tuned for posts on the EITC and phaseout ranges, which can also penalize couples.
They often avoid the 3.8% tax, the Pease limit and the Personal Exemption Phaseout as well.
The Pease and PEP (personal exemption phaseout) restrictions on limitations were also extended.
If you're in the phaseout range, try to cut your AGI, suggests San Diego CPA Ginita Wall.
This phaseout ensures that every additional dollar of earnings results in at most 21 cents of lost benefits.
The phaseout is really a sneaky way to raise marginal income tax rates.
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Another change, the limitation on itemized deductions (Pease) and the phaseout of personal exemptions (PEP) would affect less than half.
His capital gains tax rate would increase from 15% to 21.2% (20% statutory rate plus 1.2% due to the deduction phaseout).
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The law limits the phaseout to 80% of deductions, but almost nobody hits that limit because deductions tend to increase with income.
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The EITC was implemented to replace those entitlement programs and encourage some minimal amount of work followed by a very gradual phaseout of benefits.
The phaseout won't be completed until 2006 or so, but for the second time in the past decade the once-famous marque will disappear, possibly this time forever.
The amount of the phaseout is unaffected, since it depends only on income, not the total amount of deductions (except for that miniscule fraction of taxpayers at the limit).
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They include the new 3.8% investment income tax, the new phaseout of personal exemptions and itemized deductions, the deductibility of medical expenses, casualty losses and miscellaneous deductions, and certain tax credits.
The combination of a larger AMT exemption and higher thresholds for the exemption phaseout and top AMT tax bracket will further reduce the number of taxpayers owing AMT to just 3.4 million in 2013.
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Gingrich also led his Republicans to adopt a phaseout of Depression era farm subsidy programs through Freedom to Farm, which was later unfortunately reversed under Speaker Hastert and President George W. Bush after Gingrich left.
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It begins with a 15% flat rate, but taxpayers who cross certain income thresholds owe more because of the 3.8% net investment income tax, the Pease limit and the Personal Exemption Phaseout, or PEP, a backdoor increase that limits personal exemptions.
Elsewhere in economic news, consumer spending in France rose by a higher-than-expected 2.1% last December, but the numbers appeared to be boosted by the rush among the French to buy cars ahead of the government's planned phaseout of its car-scrapping scheme this month.
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Moreover, the new law requires these folks to figure their tax bills another way, applying a federal partial phaseout of itemized deductions for the better off (U.S. Tax Code Section 68) that has itself been at least temporarily phased out by the George W. Bush tax cuts.
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