Virginia State Updates

 

Retail Sales and Use Tax increase for the Northern Virginia and Hampton Roads Regions - effective July 1 VA Department of Taxation will increase the Retail Sales and Use Tax to 5.3% in Virginia and 6% in the above-named regions.

 

Accelerated Sales Tax Payments - VA Department of Taxation released the Guideines for the Accelerated Sales Tax Payment which apply to dealers and direct payment permit holders with $26 million or more of taxable sales and/or purchases beginning July 1, 2013.  See http://www.tax.virginia.gov for more info.     

 

2012 Annual Tax Report - VA Department of Taxation released its annual tax report. Please read more on TAX's website.

  

Debit Card Options for Refunds - effective Jan. 1, 2013 individual refunds will be issued though oreoaid debit cards or by direct deposit to a taxpayer's checking or avings account;

Filing Threshold - threshold has been increased to $11,950 for single taxpayers and $23,900 for married filing jointly.

Congress Passes Fiscal Cliff Act!

On January 1, 2013 Congress preserved most of George W. Bush-era tax cuts and provisions. With modifications affecting the wealthiest Americans with higher taxes, the American Taxpayer Relief Act permanently extended provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001.  The Act's features also included a one-year extension of emergency unemployment insurance and agricultural programs, and postponement of automatic cuts in Medicare payments to physicians. The Act did not address the temporary lower 4.2% rate for employees' portion of the Social Security payroll tax, which as a result increased to 6.2%.

   

Here are the highlights:

  • Individual Tax Rates - all individual marginal tax rates are retained. A new rate of 39.6% is imposed on income over $400,000 for single filers and $450,000 for married filers filing jointly;
  • Phase-out of Itemized Deductions/Personal Exemptions - a higher threshold of $250,000 for single filers and $300,000 for married filing jointly phase-out has been reinstated;
  • Capital Gains and Dividends - 20% applies to individuals above the top income tax bracket threshold, 15% - for middle brackets taxpayers and 0% - for taxpayers in the 10% and 15% brackets;
  • AMT - exemption amount has been permanently indexed for inflation. 2012 exemption amounts are $78,750 for married taxpayers filing jointly and  $50,600 for single filers;
  • Estate and Gift Tax - exclusion amount is retained at $5 million indexed for inflation ($5.12 million in 2012). Top tax rate was increased from 35% to 40%, effective 01/01/2013;
  • Permanent Extensions - included but are not limited to marriage penalty relief, child and dependent care credit rules, adoption credit, contributions to Coverdell education savings accounts, and other;
  • Business Tax Extensions - included credit for increasing R&D activities, 15-year straight-line cost recovery for qualified leasehold improvements, qualified restaurant buildings and retail improvements;
  • New Taxes - hospital insurance tax to high-income taxpayers ($250,000 if filing jointly or $125,000 if single) increased by 0.9% on wages exceeding the threshold amount; Medicare tax on investment income of 3.8% of the lesser of the individual’s net investment income or the amount of the individual's modified adjusted gross income (AGI); medical care itemized deduction threshold increased to 10% of AGI (this increase doesn't apply to taxpayers of 65 years and older); the maximum contribution to health flexible spending plans has been limited to $2,500.