<p>A friend of mine is moving to Costa Rica this weekend with his wife and three young children. She’s going to be working there and he will be working remotely (he has his own web-based company). They will both be subject to US taxes but they have foreign earnings exclusions (don’t know how much those are these days). He said that you can get residency there by depositing $65K in a local bank. That’s pretty cheap for a PR. He’s talked about what kinds of businesses they have down there. It sounds like it will be a pretty interesting experience for his family.</p>
<p>Maybe you should switch to a consulting job then Igloo if you feel you are more qualified than they are. :)</p>
<p>Consulting means a lot of traveling.</p>
<p>Yes, it does…</p>
<p>I do some “contract” stuff still which is really just statistical programming and I have not worked on site anywhere for several years now. I only work from home. It is getting to be less fun. I’m tired of having to keep learning the new platforms, the new protocols, etc. I’m getting old!</p>
<p>Seriously though, I want to know what Peas and PEP will do to our 2013 taxes and I don’t think that Tax Foundation site has the deductions changes incorporated into their calculator yet. Of course, Turbo is of no use at all. </p>
<p>So one of the most vexing aspects to all this stuff is that we’re into a new tax year without much guidance on how to set our withholdings. The rates are not really what matters – it’s the deductions and no one seems to know how that truly translates.</p>
<p>One of my coworkers got his MBA and left the company to do consulting. His typical week was to fly out early Monday morning and return home late Friday night. His wife had a baby shortly before he started. I guess that the money was good but not getting to see your kid except on the weekends has to be a pretty big downside.</p>
<p>I did consulting work for a few years but it was regional. Basically a lot of driving but no flying.</p>
<p>If you and you husband have an adjusted gross income below 300,000…
The phase out of deductions will not affect you.</p>
<p>If you have capital gains and your adjusted gross income is between 250,000 and 300,000… You will owe medicare taxes payable at a rate of 3.8 percent on those cap gains…only on adjusted gross income above 250,000.</p>
<p>For example, After deductions, ifyou have earned income of 225,000 and cap gains of 50,000 this equals 275,000. You have 25,000 of cap gains above the 250,000 threshold. You pay medicare tax of 3.8 percent on 25,000 of cap gains. Unearned income like dividends are treated the same as cap gains so
you can just use dividends instead of cap gains in this example.</p>
<p>Payroll taxes goes up 2 percent on earned income up to the SS limit. So if you and your husband each earn 100,000, your SS taxes goes up 2,000 each or a total of 4,000. If you
pay estimated taxes, you need to adjust for the increase of payroll taxes.</p>
<p>This is a good link that explains things in a simple way.</p>
<p>If you pay amt, your tax changes will be smaller.
Higher earners still get the Bush tax cuts on lower amounts of income.</p>
<p>[How</a> new tax rates will affect you in 2013 - CBS News](<a href=“http://www.cbsnews.com/8301-505146_162-57562381/how-new-tax-rates-will-affect-you-in-2013/]How”>http://www.cbsnews.com/8301-505146_162-57562381/how-new-tax-rates-will-affect-you-in-2013/)</p>
<p>Yes, Dstark, I have already seen that info and it is not helpful to me. The deduction changes will most definitely hit me and it is quite gnarly to figure out exactly how it will play. The WSJ had the most detail I could find but not all that much.</p>
<p>Oh well. I’m not having a meltdown over it I just feel kind of cynical and jaundiced about the whole thing because our intrepid media is playing this as if only couples over 450k will be hit and, pretty obviously, the deduction changes will be significantly more draconian and will hit a wider swathe of people – many of whom may have really no sense of what is in store. </p>
<p>And really – CBS news for tax information? Come on.</p>
<p>CBS and WSJ aren’t the media?</p>
<p>I guess we read what we want to read. Notrichenough already posted how the new tax structure will work. I am sure you can find out somewhere.</p>
<p>There aren’t that many couples that make 300,000 a year in adjusted taxable income.</p>
<p>Have fun being cynical and jaundiced.</p>
<p>The media is all we have, of course. I just wouldn’t think of CBS as a go-to for detailed tax information. </p>
<p>In all honestly, I don’t think anyone has a clue right now on this particular question I’m noodling on.</p>
<p>IRS has delayed tax season for 8 days so that they can do their forms. They probably need to update their software too.</p>
<p>I updated TaxACT last night and my tax bill went down around $1200.</p>
<p>This is due to the unexpectedly high AMT exemption amount - it is considerably higher than last year’s amount plus inflation. A small gift for those of us in AMT hell.</p>
<p>Nice, notrichenough…</p>
<p><a href=“News Archives - InvestmentNews”>News Archives - InvestmentNews;
<p>TaxAct was conservative on the AMT while TurboTax assumed that it would be fixed again for 2012. No bump for me after TurboTax was updated.</p>
<p>TaxACT let you assume it would be fixed, however it used last year’s exemption number.</p>
<p>For 2011 the AMT exemption was $74,450. For 2012 TaxACT is saying it is $78,750. This is an increase of 5.8%; this is substantially higher than the 2.3% the tax brackets were adjusted upwards.</p>
<p>But you guys are just modeling your 2012 taxes, right?</p>
<p>I’m not finding any sort of calculator out there that incorporates the Peas and PEP.</p>
<p>Just love typing “Peas and PEP”</p>
<p>Peas and PEP
Peas and PEP
Peas and PEP</p>
<p>!!</p>
<p>Yes, just modeling until the forms come in. You download tax act and use that for a calculator.</p>
<p>It’s not that hard to figure out, you don’t need an on-line calculator.</p>
<p>If you are married filing joint, the personal exemption amount decreases by 2% for every $2500 your AGI is over $300K. So if your AGI is over $425K, you lose all of your personal exemption.</p>
<p>Your schedule A deductions are reduced by 3% of the amount of your income over $300K, until 80% of them are gone.</p>
<p>Or you could start with an on-line calculator and just manually reduce your exemptions and deductions based on the above.</p>
<p>sewhappy, I think doing your taxes is making you slaphappy!</p>
<p>Have you usually ended up paying AMT, and if so, how much?
From what I’ve read briefly (and of course, what you read on the internet is always the truth-ha), it sounds like some are agreeing with what dstark mentioned (on this one point), and I think notrichenough talked about this too. It is also what I found when I used the tax policy center calculator.</p>
<p>The point being, " It appears that for higher income taxpayers who have traditionally paid AMT that the net effect of the increased upper tax rate increase will be offset resulting in little or no actual tax increase (compared to what would have occurred if tax rates had remained the same and a traditional AMT fix had been enacted)."</p>
<p>Of course there are still payroll taxes for everyone.</p>
<p>Only some? What I wrote is correct. It wasn’t an opinion. :)</p>
<p>Notrichenough, I think people are confused. They see their deductions lessened and they are having a hard time figuring out how this affects their taxes. This tax change is not the easiest thing to figure out.</p>
<p>If you are in a 33 percent marginal taxbracket and you lose 3,000 in deductions, you pay 1,000 more in federal income tax. And the deductions are phased in slowly so it gets more confusing for some.</p>
<p>I like your post notrichenough.</p>