TAX CHANGES FOR 2013

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Lake County Income Tax

Lake County Indiana has passed a local income tax that will be in effect starting October 1st. The Lake County tax rate is 1.5% for residents, and 0.5% for non-residents. As this rate only goes into effect for the fourth quarter of 2013, a proration of 0.375% will be used on figuring the tax due on 2013 individual tax returns. Income that is subject to county income tax includes wages, interest, dividends, business income, capital gains, IRA distributions, pensions, rental income, partnership income, S corporation income, trust income, and unemployment compensation. There are other types of income as well, so feel free to call us with any questions you may have. Please note: Social Security income is NOT subject to Indiana county tax. Essentially, any income subject to Indiana state tax is also subject to Indiana county tax.

Social Security Wage Base

For 2013 the social security wage base is $113,700, increased from the $110,100 that was the 2012 wage base.

Mileage Rates

For 2013, the mileage allowance is 56.5 cents per mile for business travel. Miles driven for medical care or for a qualified move is 24 cents per mile. This is a one cent increase from the 2012 mileage rates. The mileage rate for providing services to a charity remains at 14 cents per mile.

Medical Deduction Threshold

In 2013, taxpayers under the age of 65 are only allowed to claim medical expenses as an itemized deduction on their Schedule A that are in excess of 10% of their adjusted gross income. This has increased from 7.5% in 2012.

New Tax Rates

In 2013, there is a new tax bracket of 39.6% for single filers with AGI over $400,000 and for those married filing jointly with AGI over $450,000. Capital gain and dividend rates are now at 20% for these individuals.

2013 Federal Standard Deductions

$6,100 for single filers & married filing separately (up from $5,950 in 2012)
$12,200 for married filers (up from $11,900)
$8,950 for head of household (up from $8,700)
$1,000 for dependents (up from $950)

Extended Provisions

- The American Opportunity Credit has been extended through 2017.
- The increased child tax credit has been extended through 2017.
- The increased credit amounts of the Earned Income Credit have been extended through 2017.

These are only a few key points regarding tax changes for 2013. Please notify us if you have any questions or concerns.