Trust, Estates, and Elder Law Newsletter - 1st Quarter 2013

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O’Connell & Aronowitz Attorneys at Law

Trusts, Estates, and Elder Law Update First Quarter 2013

Pictured above are the attorneys of our Trusts, Estates, and Elder Law Department, left to right: Matthew J. Dorsey, Esq. William A. Favreau, Esq. Heidi Dennis, Esq. Fred B. Wander, Esq. Jami Durante Rogowski, Esq. Not pictured: Brittnay M. McMahon, Esq.

In This Issue: • The American Taxpayer Relief Act of 2012 • What To Do When Medicare Doesn’t Cover You At The Hospital • How Your Assets Pass Within and Outside of Your Estate • Meet Brittnay M. McMahon, Esq. • Ask the Lawyer: How Does Medicare Work? • O&A Events • General Information about O’Connell & Aronowitz

The American Taxpayer Relief Act of 2012 Back from the Brink of the Fiscal Cliff

On January 1st, Congress passed the American Taxpayer Relief Act of 2012 (ATRA), which President Obama has since signed into law. Now that we’re back from the brink of the fiscal cliff, what is in the details? Additional Marginal Rate The ATRA has added an additional marginal tax rate of 39.6 % to the current marginal rates of 10%, 15%, 25%, 28%, 33%, and 35%. This new top rate applies to married taxpayers earning more than $450,000 and single taxpayers earning more than $400,000. Payroll Tax Holiday is Over The 2% payroll tax holiday that was in effect since 2011 expires in 2013. FICA payroll taxes, which previously were set at 4.2% for 2011 and 2012, are now increased to 6.2%. New Affordable Care Act Tax The Affordable Care Act (a/k/a Obamacare) mandates the imposition of an additional 0.9% FICA tax on wages and self employment income in excess of $250,000 for married couples and $200,000 for single taxpayers. In addition, a 3.8% tax is levied on the lesser of: a) net investment income, or b) modified adjusted gross income over the income levels set forth above. Capital Gains Tax Increase Long term capital gains in excess of $450,000 for married taxpayers and $400,000 for single taxpayers are subject to a 20% tax. Long term capital gains are not taxed for those in the two lowest

marginal tax brackets (10% and 15%). Those in the middle brackets (25%, 28%, 33%, and 35%) are subject to long term capital gains taxes at the rate of 15%. Education Deduction Extended The deduction for qualified tuition and related expenses has been extended for 2012 and 2013. The maximum deduction is $4,000 for taxpayers making less than $65,000 ($130,000 if married filing jointly). Taxpayers making between $65,001 and $80,000 ($160,000 if married filing jointly) qualify for a maximum deduction of $2,000. Filers above the last limit are not entitled to any deduction. Student Loan Deduction Available An above the line deduction of up to $2,500 is available for student loan interest. The deduction is available beyond the initial 60 months of payments, but is phased out over higher income levels. Mortgage Insurance Deductible Mortgage insurance payable as part of a purchase money mortgage for a qualified residence is now deductible like qualified mortgage interest. These are a representative sample of the important changes to our tax laws for 2012 and 2013. If you’d like more information on how the American Taxpayer Relief Act (ATRA) affects you, please contact our tax attorneys at O’Connell and Aronowitz. Follow us on:

Saratoga Office: 1 Court Street Saratoga Springs, NY 12866 518.584.5205 Fax: 518.584.5441

Albany Office: 54 State Street Albany, NY 12207 518.462.5601 Fax: 518.462.2670

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Plattsburgh Office: 206 West Bay Plaza Plattsburgh, NY 12901 518.562.0600 Fax: 518.562.0657


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