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What Changes if we go over the "Fiscal Cliff"?

Just how will taxpayers be affected if no agreement is reached?Blog Image

Unless you've been stranded on a deserted island for the past few weeks, you know that we're facing what Federal Reserve Chairman Ben Bernanke has dubbed a "fiscal cliff," resulting from the expiration of the Bush-era tax cuts and the automatic across-the-board cuts in government spending set for January 1, 2013.

Congress and President Obama are trying to reach an agreement before year-end to avert the fiscal cliff. Just how will taxpayers be affected if no agreement is reached? Here are a few of the changes you'll see effective January 1, 2013, if going over the cliff is allowed to happen.
  • Wages up to $113,700 will be subject to 6.2% social security tax, up from the 4.2% rate in 2012.
  • The 10% income tax rate will be eliminated, and remaining rates will top out at 39.6%, rather than the 2012 top rate of 35%.
  • The maximum rate on long-term capital gains will increase to 20%, up from the 2012 top rate of 15%.
  • Dividends will no longer have a top rate of 15%; they'll be taxed as ordinary income with a top rate of 39.6%.
  • The child tax credit will be reduced from $1,000 per eligible child to $500.
  • Higher-income taxpayers will once again lose a portion of itemized deductions and personal exemptions.
  • The contribution limit for education savings accounts will be reduced from $2,000 to $500.
  • The top estate tax rate will go from 35% to 55%, and the exclusion amount will be reduced from $5,120,000 to $1,000,000.
  • Section 179 expensing limit for business purchases will be reduced to $25,000, down from $139,000.
  • Unless retroactively increased, the 2012 exemption amounts for the alternative minimum tax will be $33,750 for singles and $45,000 for couples, exposing an estimated 34 million taxpayers to this tax.
  • To discuss what tax-saving steps you might consider in the current shifting tax environment, contact our office.
October 25, 2024
Burzenski & Company once again supported an event at the Children's Center in Hamden. On October 24, three employees volunteered to be onsite for the Children's Center Trunk or Treat Halloween event. Callie Kutys, Shelly Panico and Carmen Rosado donned costumes and handed out candy to about 100 children. Booooooooo!
October 11, 2024
IR-2024-263, Oct. 10, 2024 WASHINGTON —The Internal Revenue Service announced today continued progress on Employee Retention Credit claims, with processing underway on about 400,000 claims, representing about $10 billion of eligible claims.
October 5, 2024
Monica Dixon Perry, CVPM, will speak at Veterinary Management Council of CT meeting
October 5, 2024
IRS Direct File set to expand availability in a dozen new states and cover wider range of tax situations for the 2025 tax filing season
September 5, 2024
On Thursday, August 29th, we held our annual state-of-the-firm and company picnic at Owenego Inn located in Branford, CT. The firm recognized the 40th employee anniversary of Partner Melody Mann Fox, CPA. Managing Partner Bill Kalinowski congratulated Melody on her tenure and accomplishments with the firm. Said Ralph L. Ricciardelli, CPA, Emeritus, a founding partner of Burzenski & Company, PC, “Mel, 40 years where does the time go? It’s not easy to build a firm and you’ve done it with a lot of grit, expertise, and professionalism. You have been integral in building the firm. You’ve been integral in helping with the staff, whether it was the administrative staff or the accounting staff. I don’t know what we would do without you. There aren’t enough words of appreciation that we can give to you.” It was a great day for employeea to play games such as bocce, corn hole, Jenga, and a trivia contest with staff split up into teams.
September 1, 2024
At the firm's annual state-of-the-firm and company picnic on August 29th, we recognized the 40th employee anniversary of Partner Melody Mann Fox, CPA. Managing Partner Bill Kalinowski congratulated Melody on her tenure and accomplishments with the firm. Said Ralph L. Ricciardelli, CPA, Emeritus, a founding partner of Burzenski & Company, PC, “Mel, 40 years where does the time go? It’s not easy to build a firm and you’ve done it with a lot of grit, expertise, and professionalism. You have been integral in building the firm. You’ve been integral in helping with the staff, whether it was the administrative staff or the accounting staff. I don’t know what we would do without you. There aren’t enough words of appreciation that we can give to you.”Mel, 40 years where does the time go? I remember when you first came to us in 1984 as a staff person. Our first tax season together was 1985. There was a lot of fun things that happened during those early years that laid the ground work for the future.
August 18, 2024
2024 Connecticut Sales Tax Free Week Highlights The 2024 Sales Tax Free Week is Sunday, August 18, through Saturday, August 24, 2024. Sales or purchases of certain items of clothing or footwear costing less than $100 per item are exempt from sales tax. This special exemption applies to purchases made from retailers located in Connecticut as well as from on-line retailers. This year will be Connecticut's 25th Sales Tax Free Week.https://portal.ct.gov/drs/sales-tax/sales-tax-free-week
July 22, 2024
Sarah Williams, formerly of Abilene, TX, has joined the staff at Burzenski & Company, as a Staff Accountant. She earned a Bachelor of Business Administration degree as well as a Master of Accountancy degree from Abilene Christian University in Abilene, TX. Prior to joining our firm, she was as a Tax Associate. She has two cats named Fig and Peach.
July 19, 2024
Burzenski & Company, PC will close the office on Fridays at 12:00 (noon) in the months of July and August. Please contact us during our normal business hours of 8:30AM to 5:00PM. 203-468-8133
May 7, 2024
Click here to listen to the podcast: https://www.buzzsprout.com/536560/15017840
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