Newspaper article The Record (Bergen County, NJ)

Big Earners Feel Pinch as Tax Day Nears

Newspaper article The Record (Bergen County, NJ)

Big Earners Feel Pinch as Tax Day Nears

Article excerpt

High-income taxpayers are paying higher taxes. Married same-sex couples have a new filing status. And it's simpler to deduct a home office -- but harder to write off medical expenses.

These are a few of the changes facing taxpayers and tax preparers as they approach the Tuesday deadline for filing 2013 taxes.

Higher-income taxpayers will pay more as a result of a tax bump that helps pay for health insurance under the Affordable Care Act, as well as the expiration of parts of the Bush-era tax cuts.

Ted Carnevale, a certified public accountant in Oradell, said that as many as 70 percent of his clients have been affected by a 3.8 percent tax applied to net investment income -- such as dividends, interest, rents and capital gains -- that helps fund the Affordable Care Act. It applies to taxpayers with adjusted gross incomes above $200,000 (single taxpayers) or $250,000 (married filing jointly).

"It affects a lot of people in our area," Carnevale said.

There's also a new Medicare tax of 0.9 percent that applies to taxpayers with earned income in excess of $200,000 (individuals) and $250,000 (married filing jointly) on all earned income over these thresholds, Carnevale said. There's already a Medicare tax of 1.45 percent, so people earning more than the thresholds will pay 2.35 percent, he said.

A number of tax cuts were approved during the George W. Bush administration, starting in 2001. They were to have expired at the end of 2010, but most were extended and later made permanent. But some tax breaks for the wealthiest Americans were allowed to expire, leading to higher taxes in 2013. For example, the top tax rates have risen from 35 percent to 39.6 percent for taxpayers with taxable income above $400,000 (single) or $450,000 (married filing jointly).

Other major changes this year:

* Itemized deductions and the personal exemption are reduced for taxpayers with adjusted gross incomes above $250,000 (single) or $300,000 (married filing jointly). …

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