2013 Social Security Changes

http://www.ssa.gov/pressoffice/factsheets/colafacts2013.htm

Cost-of-Living Adjustment (COLA):
Based on the increase in the Consumer Price Index (CPI-W) from the third quarter of 2011 through the third quarter of 2012, Social Security and Supplemental Security Income (SSI) beneficiaries will receive a 1.7 percent COLA for 2013. Other important 2013 Social Security information is as follows:

Tax Rate:	2012	2013
Employee	7.65%*	7.65%
Self-Employed	15.30%*	15.30%
NOTE:  The 7.65% tax rate is the combined rate for Social Security and Medicare.  The Social Security portion (OASDI) is 6.20% on earnings up to the applicable taxable maximum amount (see below).  The Medicare portion (HI) is 1.45% on all earnings.
* The Temporary Payroll Tax Cut Continuation Act of 2011 reduced the Social Security payroll tax rate by 2% on the portion of the tax paid by the worker through the end of February 2012.  The Middle Class Tax Relief and Job Creation Act of 2012 extended the reduction through the end of 2012.  Under current law, this temporary reduction expires at the end of December 2012.
Maximum Taxable Earnings:	2012	2013
Social Security (OASDI only)	$110,100	$113,700
Medicare (HI only)	N o   L i m i t
Quarter of Coverage:	2012	2013
Earnings needed to earn one Social Security Credit	$1,130	$1,160
Retirement Earnings Test Exempt Amounts:	2012	2013
Under full retirement age NOTE: One dollar in benefits will be withheld for every $2 in earnings above the limit.	$14,640/yr. ($1,220/mo.)	$15,120/yr. ($1,260/mo.)
The year an individual reaches full retirement age NOTE: Applies only to earnings for months prior to attaining full retirement age. One dollar in benefits will be withheld for every $3 in earnings above the limit. There is no limit on earnings beginning the month an individual attains full retirement age.	$38,880/yr. ($3,240/mo.)	$40,080/yr. ($3,340/mo.)
Social Security Disability Thresholds:	2012	2013
Substantial Gainful Activity (SGA)      Non-Blind      Blind	$1,010/mo. $1,690/mo.	$1,040/mo. $1,740/mo.
Trial Work Period (TWP)	$720/mo.	$750/mo.
Maximum Social Security Benefit: Worker Retiring at Full Retirement Age:	2012	2013
	$2,513/mo.	$2,533/mo.
SSI Federal Payment Standard:	2012	2013
Individual	$698/mo.	$710/mo.
Couple	$1,048/mo.	$1,066/mo.
SSI Resources Limits:	2012	2013
Individual	$2,000	$2,000
Couple	$3,000	$3,000
SSI Student Exclusion:	2012	2013
Monthly limit	$1,700	$1,730
Annual limit	$6,840	$6,960
Estimated Average Monthly Social Security Benefits Payable in January 2013:	Before 1.7% COLA	After 1.7% COLA
All Retired Workers	$1,240	$1,261
Aged Couple, Both Receiving Benefits	$2,014	$2,048
Widowed Mother and Two Children	$2,549	$2,592
Aged Widow(er) Alone	$1,194	$1,214
Disabled Worker, Spouse and One or More Children	$1,887	$1,919
All Disabled Workers	$1,113	$1,132

IRS announces inflation adjustments for 2013

http://www.journalofaccountancy.com/News/20126688.htm

On Thursday, the IRS released its annual revenue procedure making inflation adjustments to the gift tax annual exclusion and other items for tax years beginning in 2013 (Rev. Proc. 2012-41).

The gift tax annual exclusion will increase from $13,000 to $14,000 in 2013 and the amount of foreign earned income that taxpayers can exclude increases from $95,100 to $97,600. The amount used to reduce the net unearned income reported on a child’s tax return to calculate the kiddie tax increases from $950 to $1,000. Other inflation-adjusted amounts include the alternative minimum tax exemption for the kiddie tax, the private activity bond volume cap, the limitation on eligible long-term care premiums, high-deductible health plan definitions, the threshold for required reporting of receipt of large gifts from foreign persons, and 20 other provisions.

Rev. Proc. 2012-41 does not include the inflation adjustments for the tax tables, the Sec. 23 adoption credit, the Sec. 24 child tax credit, the Sec. 25A Hope scholarship and lifetime learning credits, the Sec. 32 earned income tax credit, the standard deduction, the Sec. 68 overall limitation on itemized deductions, the Sec. 132(f) qualified transportation fringe benefit, the Sec. 137 adoption-assistance exclusion, the Sec. 151 personal exemption, the Sec. 179 election, the Sec. 221 interest on education loans, and the unified estate credit, all of which will be addressed in separate guidance, the IRS said. Many of these items are scheduled to expire or change at the end of the year, and the IRS may be waiting to see what actions Congress takes in its lame-duck session.

The IRS also announced the 2013 contribution limits and other figures for pension plans and other retirement-related items (IR-2012-77). The elective deferral (contribution) limit for employees who participate in Sec. 401(k), 403(b), or 457(b) plans and the federal government’s Thrift Savings Plan increases from $17,000 to $17,500. The catch-up contribution limit under those plans for those age 50 and over is unchanged at $5,500.

On Tuesday, the Social Security Administration announced that the Social Security wage base for 2013 will be $113,700 (up from $110,100 in 2012).

—Sally P. Schreiber (sschreiber@aicpa.org) is a JofA senior editor

Also see http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-IRA-Contribution-Limits