2013 Inflation Adjustments and Pension Plan Limitations

2013 Inflation Adjustments and Pension Plan Limitations

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2013 Inflation Adjustments and Pension Plan Limitations


On October 18, 2012, the Internal Revenue Service announced the increase of certain tax benefits because of inflation adjustments and 2013 pension plan limitations.  The increased tax benefits are listed below:


-annual exclusion for gifts increased to $14,000 from $13,000 in 2012
-amount for unearned income on child’s tax return for the “kiddie tax” increased to $1,000 from $950 in 2012
-foreign earned income exclusion increased to $97,600 from $95,100 in 2012


Limitations on pension plans and other retirement items underwent cost-of-living adjustments for the 2013 tax year as well, while some stayed the same.  Some of the adjustments and unchanged adjustments are listed below:


-the limit for a deferral based on contribution to 401(k), 403(b), some 457, and the federal government Thrift Saving Plan increased to $17,500 from $17,000 in 2012
-the “catch-up” limit for workers over the age of 50 participating in a 401(k), 403(b), some 457, and the federal government Thrift Saving Plan did not change and remains at $5,500
-deductions to a standard IRA for a single person or a head of household that is also covered by a workplace retirement plan now apply to qualified workers who make between $59,000 and $69,000—up from $58,000 and $68,000 in 2012
-the deduction for the standard IRA also applies to married couples filing jointly, and the range is $95,000 to $115,000—up from $92,000 to $112,000 in 2012
- the deduction for the standard IRS applies to an IRA contributor who is not covered by a workplace retirement plan and makes between $178,000 and $188,000—up from $173,000 to $183,000 in 2012


There are other changes to deductions and inflation adjustments as well.  In order to understand what deductions to qualify for in the 2013 tax year, speak with a tax specialist.  


Source: Internal Revenue Service

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