TAX-AIDE

TAX-AIDE

Federal Tax Law Changes 2013

TAX-AIDE

Federal Tax Law Changes 2013

●New provisions

● Indexing

●Extenders

● Form change

●Due Dates

NTTC Training – 2013 2

TAX-AIDE

Medical Deduction Haircut

●Taxpayers can deduct amount of unreimbursed medical and dental expenses that exceeds 10% of AGI (was 7.5%)

● If 65 or older, threshold remains 7.5%

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TAX-AIDE

Capital Gains Tax Rate

●New 20% rate for higher income taxpayers

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TAX-AIDE

New Taxes

● Medicare tax on high incomes

● Net investment income tax for high income taxpayers

● Both apply if AGI exceeds $200,000 Single or HH $250,000 MFJ or QW $125,000 MFS

● Both out of scope

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TAX-AIDE

Social Security Tax Rate

●Employee portion of social security tax returns to 6.2% (was 4.2% for 2011–2012) Applies to self-employment tax too

Full social security rate now 12.4%Total S-E tax rate 15.3%

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TAX-AIDE

Standard Deduction and Exemption Increases

●$6,100 – Single or MFS $7,600 – Single >65 or blind

●$8,950 – HH $10,150 – HH >65 or blind

●$12,200 – MFJ or QW $13,400 – MFJ, QW >65 or blind

●Exemptions increase to $3,900NTTC Training – 2013 7

TAX-AIDE

Standard Mileage Rates 2013

●56.5¢ per mile – business miles

●24¢ per mile – medical miles

●14¢ per mile – charitable miles

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TAX-AIDE

EIC Maximum Credits and Income

● $6,044 – three or more qualifying children● $5,372 – two qualifying children● $3,250 – one qualifying child● $487 – no qualifying child● $46,227 ($51,567 MFJ) 3 qualifying children● $43,038 ($48,378 MFJ) 2 qualifying children● $37,870 ($43,210 MFJ) 1 qualifying child● $14,340 ($19,680 MFJ) no qualifying child

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TAX-AIDE

Deductible Long-Term Care Premium Limits

●Qualified long-term care premiums includible as medical expense on Sch A $360 – Age 40 or under $680 – Age 41 to 50 $1,360 – Age 51 to 60 $3,640 – Age 61 to 70 $4,550 – Age 71 and over

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TAX-AIDE

Other Indexing

●HSA Limits $3,250 self-only coverage $6,500 family coverage Both + $1,000 if age 55 or older

●Retirement savings credit income limits Max $29,500, $59,000 MFJ, $44,250 HH

●Max investment income for EIC $3,300NTTC Training – 2013 11

TAX-AIDE

Other Indexing

● IRA contributions Max $5,500 ($6,500 if age 50 or older) Modified AGI limits when covered by

employer plan

● Lifetime learning credit income limits

● Excludible savings bond interest – out of scope

● Foreign earned income exclusion

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TAX-AIDE

Extended Provisions 2013

●Tax-free distribution from IRAs to public charities for individuals age 70½ or older

●COD exclusion for principal residence

●Adjustment for educator classroom expenses up to $250

●Adjustment for qualified tuition and fees

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TAX-AIDE

Extended Provisions

●Premiums for mortgage insurance deductible as interest for qualified residence

●Deduction for state and local general sales taxes

●Nonbusiness energy property credit

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TAX-AIDE

Form Changes

●Sch D new lines if all transactions on statement are Code A or D – basis reported to IRS with no adjustments

●Continue to enter all capital gains/losses on Capital Gains Worksheet in TaxWise TaxWise will carry to proper forms/lines

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TAX-AIDE

Due Dates

●2013 tax returns are due Tuesday, April 15, 2014

●2014 estimated payments due April 15, 2014 June 15, 2014 September 15, 2014 January 15, 2015

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TAX-AIDE

Tax Law Changes 2013

Comments?

Questions?

NTTC Training – 2013 17