October 28, 2012. Got your eye on the November election? No matter who wins, the ‘Fiscal Cliff’ may be more important. Many of the current favorable tax changes are set to automatically expire. Here is an alert of our San Francisco tax clients about possible changes post-November.

If you are not a current client, email us or give us a call at (415) 742-4249 and we are happy to conduct a free 15 minute tax consultation.

2013 Tax Changes - San Francisco Tax Implications


  • The Bush tax cuts expire. That means the top rates on ordinary income goes from 35% to 39.6%; the top rate on capital gains goes from 15% to 20%; and the top rate on qualified dividends jumps from 15% to 39.6%. Much of the debate over tax rates focuses on income at the top. But the expiration of the Bush tax cuts affects all of us. The lowest 10% rate will disappear entirely, and everyone who actually pays income tax will pay more.


  • New taxes imposed by the 2010 Affordable Care Act (aka “Obamacare”) take effect. The Medicare portion of Social Security and self-employment taxes goes up from 2.9% to 3.8% on earned income topping $200,000 ($250,000 for joint filers). And there’s a new 3.8% “Unearned Income Medicare Contribution” on “net investment income” (interest, dividends, capital gains, rents, royalties, and annuities) over those same amounts.


  • The 2011-2012 payroll tax cuts expire. That means Social Security and self-employment taxes go up by 2% on ALL earned income up to $113,700. Two percent may not sound like a lot — but it means higher taxes for about 163 million working Americans.


  • The Alternative Minimum Tax exemptions revert back to where they stood in 2000. Under current law, those exemptions aren’t adjusted for inflation. So, every couple of years, Congress “patches” the system by temporarily raising the exemptions to where they would be if they were indexed for inflation. The AMT currently hits about 4½ million Americans — but without the “patch,” that number explodes to 33 million.


  • Estate taxes, which currently start at 45% on estates over $5 million, will also jump to 55% on estates over just $1 million.


We want our San Francisco Tax, CPA, and bookkeeping clients to know that we’re watching everything closely to help you make the most of your opportunities and avoid land mines where possible. Contact us if you need help assessing your tax situation to minimize your risk of an unplanned  tax increase. And – enjoy the election – that’s the fun part. The ‘fiscal cliff’ afterwards? Not so fun.