IRS Releases Inflation-Adjusted Amounts for 2013

Part III

Administrative, Procedural, and Miscellaneous

26 CFR 601.602: Tax forms and instructions.

(Also Part I, §§ 1, 23, 24, 25A, 32, 55, 63, 68, 132, 137, 151, 221, 2010)

                           Table of Contents

This revenue procedure sets forth inflation adjusted items for 2013. It also includes some items whose values for 2013 are specified in the American Taxpayer Relief Act of 2012, Pub. L. No. 112-240, 126 Stat. 2313 (ATRA): the beginning of the new 39.6 percent income brackets; the beginning income levels for the limitation on certain itemized deductions; and the beginning income levels for the phaseout of personal exemptions. This revenue procedure also modifies and supersedes section 3.12 of Rev. Proc. 2011-52, 2011-45 I.R.B. 701 to reflect a statutory amendment to § 132(f)(2) made by ATRA. Other inflation adjusted items for 2013 are set forth in Rev. Proc. 2012-41, 2012-45 I.R.B. 539 (dated November 5, 2012).

SECTION 2. 2013 ADJUSTED ITEMS

.01 Tax Rate Tables. For taxable years beginning in 2013, the tax rate tables under § 1 are as follows:

            TABLE 1 -- Section 1(a) -- Married Individuals

.03 Child Tax Credit. For taxable years beginning in 2013, the value used in § 24(d)(1)(B)(i) to determine the amount of credit under § 24 that may be refundable is $3,000.

.04 Hope Scholarship, American Opportunity, and Lifetime Learning Credits.

(1) For taxable years beginning in 2013, the Hope Scholarship Credit under § 25A(b)(1), as increased under § 25A(i) (the American Opportunity Tax Credit), is an amount equal to 100 percent of qualified tuition and related expenses not in excess of $2,000 plus 25 percent of those expenses in excess of $2,000, but not in excess of $4,000. Accordingly, the maximum Hope Scholarship Credit allowable under § 25A(b)(1) for taxable years beginning in 2013 is $2,500.

(2) For taxable years beginning in 2013, a taxpayer's modified adjusted gross income in excess of $80,000 ($160,000 for a joint return) is used to determine the reduction under § 25A(d)(2) in the amount of the Hope Scholarship Credit otherwise allowable under § 25A(a)(1). For taxable years beginning in 2013, a taxpayer's modified adjusted gross income in excess of $53,000 ($107,000 for a joint return) is used to determine the reduction under § 25A(d)(2) in the amount of the Lifetime Learning Credit otherwise allowable under § 25A(a)(2).

.05 Earned Income Credit.

(1) In general. For taxable years beginning in 2013, the following amounts are used to determine the earned income credit under § 32(b). The "earned income amount" is the amount of earned income at or above which the maximum amount of the earned income credit is allowed. The "threshold phaseout amount" is the amount of adjusted gross income (or, if greater, earned income) above which the maximum amount of the credit begins to phase out. The "completed phaseout amount" is the amount of adjusted gross income (or, if greater, earned income) at or above which no credit is allowed. The threshold phaseout amounts and the completed phaseout amounts shown in the table below for married taxpayers filing a joint return include the increase provided in § 32(b)(3)(B)(i), as adjusted for inflation for taxable years beginning in 2013.

                                    Number of Qualifying Children

(2) Excessive Investment Income. For taxable years beginning in 2013, the earned income tax credit is not allowed under § 32(i) if the aggregate amount of certain investment income exceeds $3,300.

.06 Exemption Amounts for Alternative Minimum Tax. For taxable years beginning in 2013, the exemption amounts under § 55(d)(1) are:

 Joint Returns or                                    $80,800

 Married Individuals Filing Separate Returns         $89,750

 Joint Returns or a                                 $153,900

(1) In general. For taxable years beginning in 2013, the standard deduction amounts under § 63(c)(2) are as follows:

 Filing Status                                     Standard Deduction

(3) Aged or blind. For taxable years beginning in 2013, the additional standard deduction amount under § 63(f) for the aged or the blind is $1,200. The additional standard deduction amount is increased to $1,500 if the individual is also unmarried and not a surviving spouse.

.08 Overall Limitation on Itemized Deductions. For taxable years beginning in 2013, the applicable amounts under § 68(b) are $300,000 in the case of a joint return or a surviving spouse, $275,000 in the case of a head of household, $250,000 in the case of an individual who is not married and who is not a surviving spouse or head of household, $150,000 in the case of a married individual filing a separate return.

.09 Qualified Transportation Fringe Benefit. For taxable years beginning in 2013, the monthly limitation under § 132(f)(2)(A) regarding the aggregate fringe benefit exclusion amount for transportation in a commuter highway vehicle and any transit pass is $245. The monthly limitation under § 132(f)(2)(B) regarding the fringe benefit exclusion amount for qualified parking is $245.

.10 Adoption Assistance Programs. For taxable years beginning in 2013, under § 137(a)(2) the amount that can be excluded from an employee's gross income for the adoption of a child with special needs is $12,970. For taxable years beginning in 2013, under § 137(b)(1) the maximum amount that can be excluded from an employee's gross income for the amounts paid or expenses incurred by an employer for qualified adoption expenses furnished pursuant to an adoption assistance program for other adoptions by the employee is $12,970. The amount excludable from an employee's gross income begins to phase out under § 137(b)(2)(A) for taxpayers with modified adjusted gross income in excess of $194,580 and is completely phased out for taxpayers with modified adjusted gross income of $234,580 or more. (See section 3.02 of this revenue procedure for the adjusted items relating to the adoption credit.)

.11 Personal Exemption.

(1) For taxable years beginning in 2013, the personal exemption amount under § 151(d) is $3,900.

(2) Phaseout. For taxable years beginning in 2013, the personal exemption phases out for taxpayers with the following adjusted gross income amounts:

                                           AGI --          AGI --

.13 Unified Credit Against Estate Tax. For an estate of any decedent dying during calendar year 2013, the basic exclusion amount is $5,250,000 for determining the amount of the unified credit against estate tax under § 2010.

SECTION 3. MODIFICATION OF REV. PROC. 2011-52

To reflect a statutory amendment made by ATRA to § 132(f)(2), section 3.12 of Rev. Proc. 2011-52 is modified to read as follows:

.12 Qualified Transportation Fringe Benefit. For taxable years beginning in 2012, the monthly limitation under § 132(f)(2)(A) regarding the aggregate fringe benefit exclusion amount for transportation in a commuter highway vehicle and any transit pass is $240. The monthly limitation under § 132(f)(2)(B) regarding the fringe benefit exclusion amount for qualified parking is $240 for 2012.

SECTION 4. EFFECT ON OTHER REVENUE PROCEDURES

This revenue procedure modifies and supersedes section 3.12 of Rev. Proc. 2011-52.

SECTION 5. EFFECTIVE DATE

Except for section 3, this revenue procedure applies to taxable years beginning in 2013. Section 3 of this revenue procedure applies to taxable years beginning in 2012.

SECTION 6. DRAFTING INFORMATION

The principal author of this revenue procedure is William Ruane of the Office of Associate Chief Counsel (Income Tax & Accounting). For further information regarding this revenue procedure, contact Mr. Ruane at (202) 622-4920 (not a toll-free call).