1. Tax Law Changes
and the
Fiscal Cliff
Wray Rives CPA CGMA
Rives CPA PLLC

2. Big Picture if Nothing Changes
• Average taxpayer will pay $3,500 more in
income and payroll tax
• Average after tax income would drop 6.2%
• Mandatory spending cuts will compel federal
agencies to cut 2.14 million jobs
• Significant cloud of uncertainty which the
markets and businesses hate
• More of a steep hill than a cliff

3. Accelerated Depreciation
It was fun while it lasted
Sec 179 Limit Phase Out
2011 $500,000 $2,000,000
2012 $139,000 $560,000
2013 $25,000 $200,000
Bonus Depreciation Percentage
2011 100%
2012 50%
2013 0%

4. Tax Rates
It was fun while it lasted
Income Tax Lowest Highest
2011-2012 10% 35%
2013 15% 39.6%
Capital Gains Tax Lowest Highest
2011-2012 0% 15%
2013 10% 23.8%
Qualified Lowest Highest
Dividends
2011-2012 0% 15%
2013 15% 39.6%

5. Tax Rates
It was fun while it lasted
Payroll Tax Self-Employed FICA Limit
2012 13.3% $106,800
2013 15.3% $110,100
AMT Rate Exemption
2012 26% Up to $175K $74,450
28% Above
2013 Same rates $45,000
4M taxpayers paid AMT in 2011
Est. 31M would pay in 2013

6. Credits and Deductions
It was fun while it lasted
Self-Employed Health Not deductible from SE Income in 2013
Insurance
Child Tax Credit Drops from $1,000 to $500 in 2013
15 year Depreciation on Back to 39.5 Years
Restaurant and Retail
Improvements
R&D Credit, Work Opportunity Credit, Gone in 2013
Energy Efficiency Credits, Deduction for
State and Local Sales Tax, Qualified Small
Business Gain Exclusion
Tuition and Education Deductions, Rollover Gone in 2013
from FSA to HSA, Mortgage Insurance
Premium Deduction, Educator Expense
Deduction, Charitable Deduction for IRA
Distributions

8. New Up and Coming Taxes
Healthcare Tax Rate Exemption
2013 0.9% Income over
$200,000 or
$250,00 if married
2013 3.8% All Investment
Income (Including
S-Corp
Distributions)

9. New Up and Coming Changes
Medical Expense 2012 > 7.5% of AGI 2013 > 10% of AGI
Deduction
FSA Cap 2012-Up to Employer 2013-$2,500
Healthcare mandate 2014 $285 or 1% of income
2015 $975 or 2%
2016 $2,085 or 2.5%

10. Estate Tax Rate Exemption
2011-2012 35% $5,000,000
2013 55% $1,000,000

11. Tax Revenue from Expiring Provisions
Tax Provision Revenue in Millions
Extend Tax Rates for everyone $94,006
Extend Tax Rates for those $62,872
below $200,000/$250,000

12. Tax Provision Revenue in Millions
AMT $132,240
Deduction for teacher expense $462
Residence Debt Exclusion $1,3227
Sales Tax Deduction $4,359
R&D Credit $14,324
15 Year Depreciation on $3,717
restaurant and retail improv.
Sec 179 Expense $2,352
American Opportunity Credit $13,123
Limit on Itemized Deductions $10,892
Child Tax Credit $35,632
Reduced Cap Gain Tax Rate $10,123
Cap Gain rate on Dividends $15,731
Exemption for active Financing $11,225

13. Rives CPA PLLC
RivesCPA.co