2013 Taxes may rise in the U.S.

celebrating a new year, yet there's a lot of uncertainty about the amount of taxes we'll pay in 2013.
Filers could see a considerable increase unless Congress and the president agree to extend tax cuts that are set to expire at the end of December. Experts say it's unlikely that lawmakers will let all the scheduled hikes take effect. Even so, you should expect some changes for next year.

• The personal exemption will increase, reportedly to $3,900, in 2013 from $3,800 this year.
• The maximum earnings subject to the Social Security tax will increase to $113,700 in 2013 from $110,100 in 2012.
• Contributions to defined contribution plans will climb to a maximum $23,000 — $17,500 in regular contributions, up from $17,000 in 2012, plus $5,500 in catch-up contributions for those 50-plus, same as in 2012.
• There will be a higher threshold on medical deductions, meaning it will be harder to qualify. You'll only be allowed to deduct medical expenses that exceed 10 percent of your adjusted gross income (up from 7.5 percent in 2012). However, if you are 65 or older, the threshold will remain at 7.5 percent. Beginning in 2017, everyone will be subject to the 10 percent limit.
• On a related note, the maximums on deductions for long-term care insurance premiums will rise. This is a tax break that many people don't know about. But if you're age 50 to 60, the maximum you'll be able to deduct will rise to $1,360 (up from $1,310 in 2012); age 61 to 70, the maximum will increase to $3,640 (from $3,500); after 70, the limit will climb to $4,550 (from $4,370).

"That extra couple of thousand dollars you pay for premiums could push you over the limit so you can deduct your medical expenses," says Gil Charney, principal tax researcher with the H&R Block Tax Institute.
• There will be a new 3.8 percent tax on investment income for upper-income filers, as a provision of the Affordable Care Act. If you're single and earning at least $200,000 or married, filing jointly, with an income of $250,000 or more, your unearned income (interest, dividends, annuities, investment gains and the like) will be subject to the 3.8 percent tax.
• The Medicare-funding Hospital Insurance Tax, currently at 1.45 percent, will increase by 0.9 percentage point for higher earners, another provision of health reform. The increase will apply only to income that's in excess of $200,000 for single taxpayers and $250,000 for those married and filing jointly.
• Flexible Spending Accounts will have federally required contribution caps for the first time in 2013. These pre-tax accounts, used to pay for family medical expenses, will have a $2,500 annual cap. (Though there were no federal caps previously, most employers had imposed a $5,000 cap).