The Internal Revenue Service (IRS) released the annual inflation adjustments to the gift tax annual exclusion and other items for tax years beginning in 2013.
- Gift tax – The gift tax annual exclusion will increase from $13,000 to $14,000 in 2013 and the amount of foreign earned income that taxpayers can exclude increases from $95,100 to $97,600.
- Kiddie tax – The amount used to reduce the net unearned income reported on a child’s tax return to calculate the kiddie tax increases from $950 to $1,000.
- Pension plans – The elective deferral (contribution) limit for employees who participate in Sec. 401(k), 403(b), or 457(b) plans and the federal government’s Thrift Savings Plan increases from $17,000 to $17,500.
- Social Security – The Social Security Administration announced that the Social Security wage base for 2013 will be $113,700 (up from $110,100 in 2012).
