From the desk of Samuel Handwerger
More on the American Taxpayer Relief Act : Personal Exemption Phaseout and Another Marriage Penalty for Wealthy!
This change in the tax law brings back into play the curtailment of personal exemption deductions for the “wealthy”. The cut back on this deduction begins for those making $300,000 for joint filers and a surviving spouse, $275,000 for heads of household, $250,000 for single filers, and $150,000 (one-half of the otherwise applicable amounts for joint filers) for married taxpayers filing separately. The total amount of exemptions that can be claimed by a taxpayer subject to the limitation is reduced by 2% for each $2,500 (or portion thereof) by which the taxpayer's AGI exceeds the applicable threshold. This is inflation-adjusted for tax years after 2013, which is an indication that this crack down on tax benefits to the wealthy is here to stay .
COMMENTS: As seen in my comment about the tax rates, this represents another big marriage penalty. This phaseout, along with the itemized deduction phase-out to be discussed next week, will increase the income taxes of persons below the $400,000/$450,000 amounts being bandied about in the media.