Recently, the IRS announced inflation adjustments for next year. Here is a brief list of them:
- The contribution limit for employees who participate in 401(k), 403(b) and some other plans will increase to $17,500 from $17,000. The “catch-up” contribution limit for workers age 50 and above remains unchanged, at $5,500.
- For taxpayers making deductible contributions to traditional individual retirement accounts, the upper income limit rises to $115,000 from $112,000 for married couples filing jointly ($69,000 for singles), if the worker is covered by a workplace retirement plan.
- For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the upper income limit rises to $188,000 of modified adjusted gross income (AGI) from $183,000.
- For taxpayers making contributions to a Roth IRA, the upper income limit is $188,000 of AGI for married couples filing jointly ($127,000 for singles), up from $183,000 in 2012.
- The annual exclusion for gifts rises to $14,000, the first increase in several years. Next year taxpayers may make tax-free gifts up to $14,000 to as many different individuals as they desire, up from $13,000 this year.
Long-Term Care Insurance
- The deductible portion of eligible long-term-care insurance premiums one can include in the term “medical care” also will increase.
Attained Age Before the Close of the Taxable Year Limitation on Premiums
40 or less $360
More than 40 but not more than 50 $680
More than 50 but not more than 60 $1,360
More than 60 but not more than 70 $3,640
More than 70 $4,550
- The amount that reduces net unearned income reported on a child’s tax return subject to the “kiddie tax” will be $1,000, up from $950 in 2012.
- For U.S. taxpayers living abroad, the foreign earned income exclusion rises to $97,600, up from $95,000 in 2012.
Credit to wsj.com