Deduction phaseout

[w2w]

Can someone explain what the Senate passed? I read it a few times, but can't figure it out. Thanks!

[Deleted]

I've read it a few times too and basically all I can figure out is I'll be subject to the phase out, but not to what extent.

[w2w]

Hmmm. I am trying to figure out if the $50k limit phases outs if income is above the threshold and if so, how.
Eta - I assume it does since it is a phaseout, I just can't figure out how and what the ultimate cap is.

[Deleted]

This is what I read in our local paper:

The White House-backed legislation would prevent middle-class taxes from rising, and raise rates on incomes over $400,000 for individuals and $450,000 for couples.

It also blocks spending cuts for two months, extends unemployment benefits for the long-term jobless, prevents a 27 per cent cut in fees for doctors who treat Medicare patients and prevents a spike in milk prices.

A last-minute addition would also prevent a $900 pay raise for members of Congress from taking effect in March.

[rubytue]

— Two limits on tax exemptions and deductions for higher-income Americans will be reimposed: Personal Exemption Phaseout (PEP) will be set at $250,000 and the itemized deduction limitation (Pease) kicks in at $300,000.

Pease: deductions reduced by 3 percent of the amount the income exceeds that $300k

eta: source: www.washingtonpost.com/blogs/wonkblog/wp/2013/01/01/wonkbook-everything-you-need-to-know-about-the-fiscal-cliff-deal/?hpid=z1

[londoncalling]

Ok a mathematical example for the Pease limitation:

You are MFJ with AGI = $325,000
325,000 - 300,000 = 25,000
25,000 x .03 = 750

Your itemized deductions would then be reduced by $750 up to 80% of total deductions.

So if your total itemized deductions are $22,500 then you would only be able to carry $21,750 in total deductions over to line 40 on the form 1041 to reduce your taxable income.