Every time we turn on the television or browse the internet, there is another report on the "Tax Cliff." The Tax Cliff is the expiration of the tax cuts passed during the administration of President George W. Bush, as well as the 2% payroll tax
holiday passed by President Obama.
The Tax Cliff is caused by:
- The expiration of current tax brackets and rates;
- An increase in the capital gains tax rate;
- The enactment of taxes in the Health Care Act;
- A phase-out of itemized deductions and the personal exemption;
- Reinstatement of the "marriage penalty";
- Loss of the alternative minimum tax patch;
- Reduction of family tax credits; and
- A loss of deductions related to education.
Our clients should also be aware that the current Estate, Gift and Generation-Skipping Transfer tax exemption amounts will revert to 2001 levels as charted on our website.
If your taxable estate exceeds $1 million, (which may include your home, insurance policies, retirement accounts, brokerage accounts, etc.) your estate may be subject to both Maryland and Federal Estate tax in 2013 and beyond. The transfer of assets prior to the end of 2012 could save your family millions of dollars in estate tax.
If your taxable estate exceeds $5 million, we encourage you to contact our office as soon as possible regarding gifting opportunities prior to January 1, 2013.
Please see our website for a comparison of the 2012 and 2013 tax changes.