Below are a few highlights for consideration as you prepare your tax documents before going to your tax preparer. It is important to always remember that you are ultimately responsible for the tax returns that you efile or authorize a tax professional to file on your behalf. If you feel you do not understand something ask.
More importantly the Internal Revenue Service is available for taxpayers with questions - IRS - Telephone-Assistance. In addition H&R Block and Jackson Hewitt are among companies that have walk-in offices that you can use. For those who prefer to use online services Turbotax is an option. Depending on your income level some of the companies with online services do offer free tax preparation.
More importantly the Internal Revenue Service is available for taxpayers with questions - IRS - Telephone-Assistance. In addition H&R Block and Jackson Hewitt are among companies that have walk-in offices that you can use. For those who prefer to use online services Turbotax is an option. Depending on your income level some of the companies with online services do offer free tax preparation.
1. Parents must have social security numbers for dependents
born before December 31, 2013 to claim an exemption on 2013 returns.
2. Tax
rates for 2013...10%, 15%, 25%, 28%, 33%,
35%, and 39.6%. The top rate only
has increased from 35% to 39.6% for Single/Head of Household filers with excess
Modified Adjusted Gross Income (MAGI) over $400,000 & Joint filers over
$450,000.
3. Personal
exemptions...2013 - $3,900; 2014 - $3,950.
Beginning in 2013, the personal exemption begins to phase out for
taxpayers with adjusted gross income amounts over $300,000 for Joint filers,
$250,000 for Single filers, and $275,000 for Head of Household.
4. Standard deductions (in lieu of itemizing deductions) - 2013: Age 65+ or Blind
Standard Deduction Each Spouse
Married
Filing Jointly /
Qualified
Widower $12,200 $
1,200
Single $ 6,100 $ 1,500
Head of
Household $ 8,950 $
1,500
5. Investment
income of children under age 18 or children under age 24, as long as they are full time students in excess of $2,000
is taxed at the parent’s marginal tax rate.
6. Investment
Income: Beginning in 2013, all
excess investment income for those with modified adjusted gross income over
$200,000 for single filers; $250,000 for Joint filers will include an
additional 3.8% Medicare tax liability.
7. FICA
wage ceiling: For 2013, the so-called
payroll tax social security holiday ended
and the base rate has returned to 6.2% of taxable wages each for both employee
and employer contributions up to the wage ceiling of $113,700. For 2014, the ceiling will be $117,000. . Medicare:
For 2013 the base rate is 1.45% of taxable wages for both employer and employee
and has an unlimited wage ceiling. Beginning
in 2013, the employee share increases to 2.35% for taxable wages over $200,00
for Single filers, $250,000 for Joint filers.
9. Ceiling on 401(k) and 403(b) contributions: Simple Contributions:
2013 - $17,500 ($23,000
if 50 or older) 2013
- $12,000 ($14,500 if 50 or older)
2014 - $17,500 ($23,000
if 50 or older) 2014
- $12,000 ($14,500 if 50 or older)
10. 2013 contributions for IRA and non-working spousal
IRA: $5,500; ($6,500 if 50 or older)
2014 contributions for IRA and non-working spousal IRA:
$5,500; ($6,500 if 50 or older)
11. Standard
mileage rate: For 2013: Business is $.565 …for charity $.14 .. for medical
and moving $.24
For 2014: Business is $.56 …for charity
$.14 … for medical & moving $.235
12. Allowable Earnings for Social Security below full retirement age is $15,120 for 2013 and $15,480 for 2014…on
or after full retirement age unlimited earnings. $1 gets deducted for every $2 you earn over
the allowable earnings limit.
13. Annual
gift tax exemption - $14,000 per individual for both 2013 and 2014.
14. Penalty-free
withdrawals from IRA can be made for medical expenses in excess of 10% of
adjusted gross income
15. Long
term capital gain and qualified dividends rates are now graduated rates based
on modified adjusted gross income (MAGI).
For 2013, Single filers with (MAGI) under $36,250 and Joint filers
under $72,500 will pay 0%. Single filers
between $36,250 - $200,000 and Joint filers between $72,500 - $250,000 will pay
15%. Single filers between $200,000 -
$400,000 and Joint filers between $250,000 - $450,000 will pay 18.9%. Single filers over $400,000 and Joint filers
over $450,000 will pay 23.8%.
16. Annual
compensation limit for retirement plans is $255,000 in 2013; $260,000 in 2014. Contribution limits are set at $51,000 in 2013
and $52,000 for 2014 for profit sharing and simplified employee pension plans,
and $205,000 in 2013 and $210,000 for 2014 for defined benefit plans.
17. IRA
distributions. For
2013 taxpayers age 70 1/2 or older can continue to make tax-free distributions
from IRAs for charitable purposes.
NEW AND/OR REVISED TAX PROVISIONS INCLUDE:
·
The enhanced Code Sec 179 maximum dollar limitation and investment limitation
respectively is $500,000 and $2,000,000 in 2013.
·
AMT exemption. The Alternative Minimum Tax (AMT) exemption for 2013 is $80,800
for married; $51,900 for singles and head of household; and $40,400 for married
filing separate taxpayers It will be
indexed for inflation in 2014 and beyond.
·
Itemized
deductions for medical expenses. Beginning with
the 2013 tax year, deductions for unreimbursed medical expenses must exceed 10%
of your adjusted gross income to be deductible.
For individuals age 65 and older, the threshold remains at 7.5% until
December 31, 2016.
·
Income for forgiveness of mortgage indebtedness. Principal-residence homeowners who
have part of their mortgage debt forgiven have been spared having to pay income
tax on the forgiven income for joint filers up to $2 million dollars. The
Emergency Economic Stabilization Act of 2008 extends this benefit through 2013.
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