Act designed to help reduce the federal deficit by approximately $496 billion over five years through a restructuring of the tax code. The following include some of the major provisions that will have an impact, on financial planning:
Establishment of a new top tax rate on ordinary income (wages, interest, dividends, etc.) of 36% on taxable income alone: Applicable Filing Status Threshold Married individuals filing joint returns $ 140,000 Heads of households 127,500 Unmarried individuals 115,000 married individuals filing separate returns 70,000 Estates and trusts 5,500
Establishment of a new 10% surtax on individuals with taxable income in excess of $250,000; except for married individuals filing separately the surtax applies to taxable income over $125,000.
Establishment of a new 39.6% marginal tax rate, which includes the above 10% surtax, to be applied to taxable income in excess of the $250,000. Long-term capital gains are not subject to the higher rates, and will not be taxed at a rate higher than 28%. Since the passage of this Act, the maximum long-term capital gains tax has been reduced to 20%.
Establishment of a new two-tiered progressive Alternative Minimum Tax rate schedule for non-corporate taxpayers as follows: married individuals filing a joint return would pay a 26% rate on Alternative Minimum Taxable Income up to $175,000, and a 28% rate on Alternative Minimum Taxable Income in excess of $175,000; married individuals filing separate returns would pay a 28% rate on Alternative Minimum Taxable Income in excess of $87,500.
Exemptions under the Alternative Minimum Tax increased as follows: to $45,000 from $40,000 for married individuals filing joint returns; to $22,500 from $20,000 for married individuals filing separate returns, as well as estates and trusts; to $33,750 from $30,000 for single individuals.
Elimination of the dollar limitation cap on self-employment income and wages subject to medicare hospital insurance.
Establishment of new maximum estate and gift tax rates as follows: for transfers between $2.5 million and $3 million, a 53% rate is applied; for transfers in excess of $3 million, a 55% rate is applied.
Deductible of allowable meals and entertainment to the extent of 50% of costs.
No deduction for club dues permitted; however, particular business expenses such as meals and entertainment incurred at a club are deductible to the extent of 50% of costs.
For the publicly held corporation, no deduction permitted for compensation paid over $1 million for any one of its highest five executives.
For qualified retirement plan contributions, a reduced compensation ceiling from $235,840 in 1993 to $150,000 beginning in 1994. The $150,000 ceiling is to be indexed according to the inflation index each year beginning in 1996.
For Social Security recipients, up to 85% of Social Security benefits taxable for married retirees with income in excess of $44,000 and for single retirees income in excess of $34,000.
For self-employed individuals, a deduction as a business expense up to 25% of the premiums paid for health insurance coverage for that individual, spouse, and dependents.
Repeal of the luxury excise tax of 10% on boats, aircraft, jewelry, and furs. The luxury excise tax of 10% indexed for inflation remains for automobiles in excess of $30,000.
Maximum corporate tax rate increased to 35% on taxable income above $10 million. For the personal service corporation, the flat rate is increased to 35%.
Payments made to the insured by the insurance company before the settlement date. For example, a claim is scheduled to be settled on June 1, 2000, but the insurance company pays the ...
each individual has an unlimited insurable interest in his or her own life, and therefore can select anyone as a beneficiary. parent and child, husband and wife, brother and sister have an ...
Average earned monthly income of the insured wage earner after regular earned income has been interrupted or terminated because of illness, sickness, or accident. This income amount is ...
Contract providing income payments beginning when the named contingency occurs. For example, upon the death of one spouse (the contingency), a surviving spouse will begin to receive monthly ...
Professional association that sets standards of performance for those engaged in actuarial functions. Members are entitled to use the professional designation MAAA (Member, American Academy ...
Arrangement whereby an insurance company agrees to pay specified health care service vendors a predetermined sum for providing such services to the covered individuals. ...
When you’re going through the home buying process, especially if it’s your first time, it may be easy to get lost through the paperwork, legal terms, and additional things you ...
A life insurance policy can help enable your family to remain financially if you or your spouse should die. Insurance company understands that life is constantly changing, so we have ...
Warranties primarily cover manufacture\'s defects parts that go bad from regular use. Insurance covers things like- Theft Fire Power surges Lightning Spilled coffee in the keyboard ...
A principle of insurance which provides that when a loss occurs, the insured should be restored to the approximate financial condition occupied before the loss occurred, no better no worse. ...
Liability Coverage: In case you're sued as a result of an auto accident. Collision Coverage: Helps cover physical damage to your vehicle due to collision or upset. Comprehensive Coverage: ...
You need separate coverage for the variety of risks you face when storing, launching, hauling or running your seaworthy vessel. Boats, and other watercrafts can be large investments, and ...
There comes a time when every zealous homeowner asks himself – usually at a very inconvenient hour, like 3 am: Do I need Flood Insurance?
The answer is: probably.
Here’s why: ...
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