← FarmCPA Home

Fiscal Cliff Example # 2

By: | Trackback URL | 1 Comment

October 30th, 2012

We had several readers respond to our post yesterday asking for a couple more examples for a more “typical” situation.  The seminar included other examples.  One example was a married couple with three children and “normal” itemized deductions with the husband earning $100,000.

In this example, the gross income tax owed for 2011 was $7,779.  After a $3,000 child tax credit and a $1,500 education credit, the final tax amount was $3,279.  For 2012, the tax is currently scheduled to increase to $4,860 unless they extend the AMT “Patch” increased exemption amount.  If this is extended (which should happen, but may not), the actual tax owed would be $3,184. 

In 2013, the total tax bill would be $5,860 or an increase of almost $2,600 from 2011 or a 79% increase.  In addition, their families FICA tax would increase by $2,000.  Although a much smaller number than the example yesterday, this is a much higher percentage increase in tax.

The primary reason for the large increase is the child credit is reduced from $1,000 per child to only $500 per child.

Another example with a husband earning $100,000 and the wife earning $50,000 with a long-term capital gain resulted in their total tax bill going from $26,625 in 2011 to $34,375 or an increase of $7,750 or about 29%.

For most taxpayers, even if Congress does extend the Bush and Obama tax cuts for another year, if the AMT “Patch” is not enacted, most taxpayers would see little or no benefit from the extension.  The AMT number becomes larger and larger each.

 Paul Neiffer, CPA

Paul Neiffer

Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a partner with CliftonLarsonAllen in Yakima, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. In fact, Paul drives combine each summer for his cousins and that is what he considers a vacation. Leave a comment for Paul. If you would like to leave a comment for Paul, follow the link above, however, please make sure to include your email address so that he can reply to your comment (your email address will not automatically show up).

More Posts - Website

Follow Me:
Twitter

← FarmCPA Home

1 Comment

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Subscribe to this blog by:

Previous Posts

Events

View upcoming speaking engagements and other networking events for Paul Neiffer and CliftonLarsonAllen’s agribusiness team.

See All

  • Twitter Feed

    I hope KC does not waste all their hits tonight 2 days ago

    Nothing better (for a farm boy) pic.twitter.com/DUShoT5cpF

    6 days ago

    If you have higher yields or go all corn for the 2014 crop year consider ARC-IC. It may more than offset base acre penalty 1 week ago

    Presenting two farm bill seminars today. Dayton and Walla Walla 1 week ago

    Netflix down $110 in after hours trading. Sign of momentum stocks going flat? 2 weeks ago

    Getting ready to go to LA to defend my son and I APU Alumni golf tournament victory last year. I may have to carry him again 2 weeks ago

    Everybody worried about bubble in land market. They should worry about stock market bubble 2 weeks ago

    77 degrees on October 8. Perfect. 3 weeks ago

    Somehow IRS listed several counties in Iowa as drought stricken. Hard to believe after all the rain this year 4 weeks ago