On October 18, 2012, the Internal Revenue Service announced the increase of certain tax benefits because of inflation adjustments and 2013 pension plan limitations.  The increased tax benefits are listed below:

-annual exclusion for gifts increased to $14,000 from $13,000 in 2012
-amount for unearned income on child’s tax return for the “kiddie tax” increased to $1,000 from $950 in 2012
-foreign earned income exclusion increased to $97,600 from $95,100 in 2012

Limitations on pension plans and other retirement items underwent cost-of-living adjustments for the 2013 tax year as well, while some stayed the same.  Some of the adjustments and unchanged adjustments are listed below:

-the limit for a deferral based on contribution to 401(k), 403(b), some 457, and the federal government Thrift Saving Plan increased to $17,500 from $17,000 in 2012
-the “catch-up” limit for workers over the age of 50 participating in a 401(k), 403(b), some 457, and the federal government Thrift Saving Plan did not change and remains at $5,500
-deductions to a standard IRA for a single person or a head of household that is also covered by a workplace retirement plan now apply to qualified workers who make between $59,000 and $69,000—up from $58,000 and $68,000 in 2012
-the deduction for the standard IRA also applies to married couples filing jointly, and the range is $95,000 to $115,000—up from $92,000 to $112,000 in 2012
- the deduction for the standard IRS applies to an IRA contributor who is not covered by a workplace retirement plan and makes between $178,000 and $188,000—up from $173,000 to $183,000 in 2012

There are other changes to deductions and inflation adjustments as well.  In order to understand what deductions to qualify for in the 2013 tax year, speak with a tax specialist.  

Source: Internal Revenue Service