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November 30, 2012

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Page 8 POST-GAZETTE, NOVEMBER 30, 2012 FINANCIAL CONSIDERATIONS FOR 2013 It Isn't too Early to Think About Next Year by Joe Vita We are now in plain view of the "fiscal cliff." After the election, Congress may or may not end up keeping income and estate tax rates at their recent levels. Next year may bring some notable financial developments, and it isn't too soon for house- holds to think about them. You may want to priori- tize tax reduction. If the Bush-era tax cuts sunset, everyone will see higher taxes. The federal income tax brackets (10%, 15%, 25%, 28%, 33%, 35%) that we have known for the last nine years would be replaced by five higher ones (15%, 28%, 31%, 36%, 39.6%) come 2013.l High earners may want to watch their incomes. If your earned income for 2013 tops $200,000 -- or exceeds $250,000, in the case of a couple -- you may face two Medicare surtaxes. While the Medicare payroll tax on earned incomes above these levels is set to rise to 2.35% from the current 1.45%, the second surtax may prove to be the real annoyance: there is scheduled to be a 3.8% charge on net investment income for individuals and couples whose modified ad- justed gross incomes sur- pass these levels.1, 2 Some fine points about this second surtax must be mentioned. It would actually be levied on the lesser of two amounts -- either your net investment income or excess MAGI above the $200,000/$250,000 levels. Most investment income derived from material par- ticipation in a business ac- tivity would be exempt from the 3.8% surtax, along with tax-exempt interest income, tax-exempt gains realized from selling your home, re- tirement plan distributions and income that would al- ready be subject to self-em- ployed Social Security tax.2 The bottom line is that a bonus, an IRA distribution, or a sizable capital gain may push your earned income above these thresholds -- and it will be wise to consider the impact that would have. You may have less take- home pay next year. Social Security taxes for paycheck employees are slated to re- turn to the 6.2% level in 2013. They've been at 4.2% since the start of 2011. If you earn $75,000 during 2013, you will take home about $1,500 less of it than you would have in 2012. If you earn $50,000, we're talking $1,000 less.a Any 2013 Social Security Cost of Living Adjustment (COLA) may be minor. In 2012, the cost of living ad- justment to Social Security benefits was 3.6%. Before that, Social Security recipi- ents went three years with- out a COLA. As inflation is mild, whatever COLA is announced this fall in tan- dem with Medicare pre- mium changes may not amount to much.1 Next year, medical ex- pense deductions may shrink. If you are thinking about delaying a procedure or surgery until 2013, re- member that the itemized deduction threshold for unreimbursed medical ex- penses is set to increase from 7.5% to 10% of adjusted gross income in 2013. Even if that happens, however, the threshold will remain at 7.5% through 2016 for tax- payers age 65 and older.I You maY be able to find a better Medicare Advantage plan for 2013. The Afford- able Care Act has altered the landscape for these plans (and their prescription drug coverage). Using Medicare's Plan Finder (click on the "Find health & drug plans" link at, you may discover similar or bet- ter coverage at lower premi- ums. The enrollment period for 2013 coverage runs from October 15 to December 7.1 Those without work may find a safety net gone. Ex- tended jobless benefits may disappear for the long-term unemployed at the start of 2013. Will Congress extend them once again? Possibly -- but that isn't a given. The estate & gift tax exemptions may shrink sig- ni~cantly. The (unified) life- time federal gift and estate tax exemption is currently set at $5.12 million -- and it will drop to $I million in friendly introduction to the language and culture of Italy. Toys & Books and Newly DVDs & CDs Arrived Clothing Italian Pinocchio Imports 2013 if Congress stands pat. Federal gift tax and estate tax rates are also slated to max out at 55% in 2013, as opposed to 35% in 2012. Right now, an unused por- tion of a $5.12 million life- time exemption is portable to a surviving spouse; in 2013, that portability is sup- posed to disappear.4 Many analysts and econo- mists think that Congress will eventually abide by Pres- ident Obama's wishes and take things back to 2009 instead of 2001 -- that is, a $3.5 million estate tax ex- emption, a $i million life- time gift tax exemption, and a 45% maximum estate and gift tax rate.4 Prepare for year-end drama ... and for 2013. The last two months of 2012 will surely bring political theatre to Capitol Hill. As it unfolds, you may want to look ahead to next year and consider the impact that these poten- tial changes could have on your financial life. Joe Vita Financial Executive Trilogy Financial Services 781-933-6533 ext. 2616 781-933-6833 Fax Registered Representa- tives offer securities through NATIONAL PLANNING COR- PORATION (NPC). MembeT FINRA, SIPC. Trilogy Finan- cial Services and NPC are separate entities. This material was pre pared by MarketingLibrary.Ne: Inc., and does not necessar- ily represent the views of the presenting party, nor their affiliates. All information is believed to be from reli- able sources; however we make no representation as to its completeness or accuracy. Please note -- in- vesting involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, account- ing or other professional services. If assistance is needed, the reader is ad- vised to engage the services of a competent professional. This information should not be construed as invest- ment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to pur- chase or sell any investment or insurance product or ser- vice, and should not be re- lied upon as such. All indi- ces are unmanaged and are not illustrative of any par- ticular investment. CITATIONS 1. money/ blogs / the-best-life~ 2012/08/ 29 / get-ready-for-5-key- money-changes-in-20 1 3 [8/29/12] 2. inside.aspx?id=364 [2/23/12] ~ 2012 / 05 / 29/news/economy/payroll- tax-cut/ index.htmx [5/29/12] 4. taxes / income/preparing- for-taxmageddon- 1337724496427/ [5/23/12] (FROM rraLmN NEWSPAPERS AND OTHER PUBLICATIONS) LONGEVITY IS ACHIEVABLE: WITH NUTS: Anyone who plans to live a long life, as many would like to, must do away with eating red meat, which all researchers agree increases the risk of dying at an early age. The reason being that red meat is a contributing factor in the develop- ment of serious illnesses, namely cancer and cardiovas- cular ailments. Conversely if you follow a diet that strongly recommends eating fish and white meat you seriously cut the risk of an early death. But there is more. If you add to the "fish diet" a good, daily portion of nuts -- such as wal- nuts and almonds -- as well as other dry fruits you gain a good, enjoyable, healthy and long life. l PARENT MUST SUPPPORT AN UNEMPLOYED CHILD, NO MATTER WHAT AGE! The Italian Supreme Court (the Cassazione, one of the three) has recently reversed a deci- sion of an Appellate Court regarding a 41-year-old daughter, who still .lives with her divorced mother since age 13. The story begins in 1999 when the parents got a divorce and the girl elected to live with the mother, while the father paid alimony. Subsequently the father retired with a pen- sion and decided to stop paying the alimony to the former wife. At this juncture, the mother hired an attorney and went to court to force the father to resume paying alimony. The judge ruled that the father must pay alimony. The father appealed. The Appellate Court then decided in favor of the father reversing the lower court's decision. The Supreme Court's decision (Cassazione) mandated that the father resume the payment of the alimony. This is a unique case and a very rare one indeed in the annals of Italian Jurisprudence. The unprecedented rul- ing by the Cassazione is truly a first. We are unaware of any latest developments, vis-a-vis the latter decision and the way it was reached. We learn also that the girl was about to finish law school with the subsequent graduation. We look forward for later developments and how it will endl THE VIRGINIA'S "JEFFERSON" LAB HAS A NEW DIRECTOR: PATRICIA ROSSI. Patricia Rossi is a research physicist. She worked at the "Laboratorio Nazionale di Fisica" (national physics laboratory), at Frascati, Italy, as a nuclear physicist. She was subject to a very strict selec- tion process, which led to her being chosen by Virginia's Jefferson Lab. She is now the director of the research pro- grams on nuclear physics, while at the same time, she is engaged in the restructuring the Physics division at the Lab. At the Lab there are more than 800 individuals who work there. This Lab is one of ten "national" labs financed by the United States Government Department of Energy. Rossi is a native of Rome (1960) and graduated from the University of Rome "La Sapienza," in 1986. In 1988 she received a scholarship and entered the Frascati Labs in 1990. Her focus is on the study of the particles which make- up the atomic nuclei. We wish her very "good luck," or as we say in Italian, "in bocca al lupoF (in the mouth of the wolf!.) Boston Redevelopment Authority CIP/flail 9Ih Floor 1 City Hall Square 8o~oa, MA 02201 617.722A300 1he Boston Redevelopment Authorily will host a public meeting regarding Nashua Street Residences Thursday, December 6th, 6:30PM at the offices of cbt architects, 110 Canal Street. Project Proponent: Avalon Bay Communities, Inc. Project Description: The Proponent filed a Notice of Project Change proposing modifications to the previously-approved Nashua Street Residences Project located on Nashua Street adjacent to the TD Garden and the Tip O'Neill Federal Building. The primary modifications to the Proposed Project are the change in number of residential units from 363 to 503 units, a reduction in the number of parking spaces from 270 to 219 spaces, and a change from residential condominiums to residential rental units. The height of the Proposed Project remains unchanged. CLOSE OF COMMENT PERIOD: December 31, 2012 MAIL TO:GEOFF LEWIS BOSTON REDEVELOPMENT AUTHORITY ONE CITY HALL SQUARE, 9TH FLOOR BOSTON, MA 02201 PHONE: 617.918.4297 FAX: 617.742.7783 EMAIL: geoffreylleWis.bra @ Brian E Golden Executive Director~Secretary