Taxpayers should be aware of numerous tax law changes for 2013 and 2014. Below are just a few key tax law changes you should be aware of that could affect your tax return this year.
1) Income Tax Rate Increase for High Earners beginning in 2013:
The new 39.6% rate applies to incomes above:
Married Filing Joint: $450,000
Head of Household: $425,000
Single: $400,000
Married Filing Separate: $225,000
2) Capital Gain & Dividend Rate Increase for High Earners beginning in 2013:
The top capital gains rate increases from 5% to 20%. This rate applies to taxpayers with incomes above:
Married Filing Joint: $450,000
Head of Household: $425,000
Single: $400,000
Married Filing Separate: $225,000
3) Additional Medicare Tax:
For single taxpayers with income greater than $200,000 and married fielding joint filers with income > $250,000, there is a new .9% Medicare Tax (See instructions for other filing statuses). This new tax needs to be calculated and reported using the new form 8959.
4) New 3.8% Additional Medicare Tax on Net Investment Income:
This new tax applies to Single Filers with income > 200,000 and MFJ filers wtih income > $250,000. (other filing status have different thresholds) As your tax professional if this tax applies to you.
5) New Home Office Deduction Simplification:
The IRS has released rules regarding the home office deduction calculation. Taxpayers may now claim $5/sq ft on up to 300 sq ft of qualifying home office space used for business. This rule is designed to simplify home office deduction record keeping and reporting for small business home offices.
6) Higher Threshold for deducting Medical Expenses: 10%
These six changes are just a few of the many tax changes that could affect your tax return for 2013 resulting from recent legislation, primarily the American Taxpayer Relief Act of 2012 and the Affordable Care Act. Please be sure to address your 2013 tax needs earl in the 2014 season. If you are looking for tax assistance please contact Stephen Scott at 314-984-9829 x11 or email info@scottcpa.com.