Fiscal Cliff Deal Tax Changes for 2013

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On Dec. 31, 2012 Washington hammered out a last-minute agreement for tax deals to avert the looming fiscal cliff.

A collective sigh of relief could be heard by taxpayers even though Congress did not fix spending cuts.

Now as we begin gathering documents for the April 15 tax filing date, there are new tax laws from the fiscal cliff deal that will affect everyone.

One immediate thing that will be noticed is the Internal Revenue Service (IRS), thanks to the last-minute changes, is processing tax returns at a slower rate.

But it doesn't mean you have to delay things.

U.S. President Barack Obama has said that 98% of Americans will not see their income taxes go up - but take a look to be sure, because there is something for everyone in here.

Your Fiscal Cliff Deal Tax Changes for 2013

First, here's some good news from the tax changes:

  • Being married isn't a bad thing! Couplesstill have the standard deduction that's twice that of individuals. For the 2012 tax year, this standard deduction increased to $6,100($12,200 for married couples filing jointly), a rise from $5,950 ($11,900 for married couples filing jointly).
  • Many middle-class taxpayers will be protected from the alternative minimum tax (AMT)as the income exemption level will now be permanently adjusted for inflation. This means taxes will be less for the 60 million Americans that would have impacted.
  • For homeowners who were either granted principal forgiveness or underwent a short sale or foreclosure, they will not have to pay tax on the forgiven debt amount with the deal's one-year extension.

But, here's where you got hit:

  • Say goodbye to the two-year payroll tax holiday. It has expired and now employees' net pay is down two percentage points as 6.2% of Social Security will be taken out of paychecks versus 4.2%. There is $113,700 wage ceiling so any wages over that will be exempt.
    • A worker with a $41,000 salary - the national average--will have $32 less in a biweekly paycheck, reported CNN.
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