The Foreign Service Journal, January-February 2014

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2014 53 AFSA NEWS WOMEN IN SECURITY AND DEVELOPMENT FOCUS AFSA NEWS CALENDAR THE OFFICIAL R CORD OF THE AMERICAN FOREIGN SERVICE ASSOCIATION 1/1/2014 New Year’s Day AFSA Offices Closed 1/8/2014 12:00 - 2:00 PM AFSA Governing Board Meeting 1/16/2014 5:00 - 7:00 PM AFSA Member Happy Hour 1/20/2014 Martin Luther King Jr. Day AFSA Offices Closed 2/5/2014 12:00 - 2:00 PM AFSA Governing Board Meeting 2/6/2014 Deadline for Academic/Art Merit Awards 2/17/2014 President’s Day AFSA Offices Closed 2/26/2014 AFSA Advocacy Day Hill Reception 2/28/2014 Deadline for Dissent and Performance Awards Nominations Federal and State Tax Provisions for the Foreign Service Tax Guide continued on page 64 2013 AFSA TAX GUIDE AFSA’s annual Tax Guide is designed as an informational and reference tool. Although we try to be accurate, many of the new provisions of the tax code and the implications of Internal Revenue Service regulations have not been fully tested. Therefore, use caution and consult with a tax adviser as soon as possible if you have specific questions or an unusual or complex situation. Foreign Service employ- ees most frequently ask AFSA about home ownership, tax liability upon sale of a residence and state of domi- cile. We have devoted special sections to these issues. James Yorke (YorkeJ@state. gov), who compiles the tax guide, would like to thank M. Bruce Hirshorn, Foreign Service tax counsel, for his help in its preparation. FEDERAL TAX PROVISONS For 2013 the six tax rates for individuals remain at 10, 15, 25, 28, 33 and 35 percent, with a new 39.6-tax rate added. The 10-percent rate is for taxable income up to $17,851 for married couples, $8,126 for singles. The 15-percent rate is for income up to $75,501 for married couples, $38,251 for singles. The 25-per- cent rate is for income up to $146,401 for married couples, $87,851 for singles. The 28-percent rate is for income up to $223,051 for married couples and up to $183,251 for singles. The 33-percent rate is for income up to $398,351 for married couples and singles. Annual income above $398,351 is taxed at 35 percent. Income above $450,000 for married couples and above $400,000 for singles is taxed at 39.6 percent. Although long-term capital gains are taxed at a maximum rate of up to 15 percent and are reported on Schedule D, married tax- payers with income greater than $450,000 and singles greater than $400,000 pay a capital gains rate of 20 percent. These rates are effective for all sales in 2013, except for those people who fall within the 10 to 15 per- cent tax bracket: their rate is either 0 or 5 percent. Long- term capital gain is defined PLEASE NOTE This guidance applies to the 2013 tax year, for returns due on April 15, 2014. We expect there will be a variety of changes to the tax code for the 2014 tax year, but at present, we are not aware of any possible changes that are likely to apply to 2013.