What’s New for 2013 Tax Year
Coral Springs, FL , February 7, 2014
Due Date for Form 1040
The 2013 tax year Form 1040 filing deadline is April 15, 2014. Extension to file can be obtained before April 15, 2014; it will allow filing individual tax return before October 15, 2014. Please note, extension to file late does not mean extension to pay tax late. If you need extension, please call us before the deadline.
Due Date for Forms 1120, 1120-S and 1065 (Business Tax Returns)
The 2013 tax year Form 1120, 1120-S and 1065 filing deadline is March 17, 2014 (because March 15, 2014 falls on Saturday). Extension to file can be obtained before March 17, 2014; it will allow filing business tax return before September 15, 2014. Please note, extension to file late does not mean extension to pay tax late.
Standard Deduction
Married Filing Jointly - $12,200
Single - $6,100
Head of Household - $8,950
Married Filing Separately - $6,100
Additional Standard Deduction for Age 65 and Over and/or Blind (Each)
Married Filing Jointly - $1,200
Married Filing Separately - $1,200
Qualified Widower - $1,200
Single - $1,500
Head of Household - $1,500
Personal Exemption - $3,900 per person
Standard Business Mileage Rate – 56.5 cents per mile
Income Tax rates made permanent
For 2013 and beyond, the top individual income tax bracket will increase from 35% to 39.6% for taxpayers with taxable income of $400,000 or more ($450,000 or more for Married Filing Jointly). Taxpayers with income below the thresholds will not see an increase in tax rates.
Capital Gain rates
Beginning in 2013, the maximum capital gains tax will increase from 15% to 20% for taxpayers with taxable income of $400,000 or more ($450,000 or more for Married Filing Jointly).
Additional Medicare Tax on Earned Income
Effective Jan 1, 2013 individuals with high income are subject to additional 0.9% Medicare tax on earned income. You are subject to this tax if you file as Married Filing Jointly and earned income exceeds $250,000, for Married Filing Separately earned income exceeds $125,000 and for Single, Head of Household and Qualifying Widowers earned income exceeds $200,000.
FICA Tax rate
An employee’s Social Security portion of FICA increased from 4.2% to 6.2% in 2013, with a corresponding increase in self-employment tax.
ITINs Expire after 5 years
Non-resident individuals who obtained ITIN (Individual Taxpayer Identification Number) after January 1, 2013 please note that your ITIN will expire in 5 years. If after that time period you still need ITIN number, you will have to re-apply.
Medical Expense deduction
The Adjusted Gross Income (AGI) threshold for deducing medical expenses as an itemized deduction is increased from 7.5% to 10%, unless taxpayer or spouse turns age 65 before the end of the year 2013. Example: If your AGI is $50,000 and you had $8,000 in medical expenses, you can now deduct only $3,000 (if you itemize), prior to 2013 you could deduct $4,250.
401(k)/403(b) Deferral Limits
Effective 2013 deferral limits to 401(k)/403(b) plans have increased to $17,500 per year for individuals under age 50, and to $23,000 for individual taxpayers age 50 and over.
IRA Contribution Phase-Out Range for Active Participation in Employer Plan
The new Modified Adjusted Gross Income (MAGI) limits affecting deductions for traditional IRA contributions in 2013 are: Singles and Heads of Household - $59,000-$69,000, Married Filing Jointly - $95,000-$115,000, Married Filing Separately - $0-$10,000. For Married Filing Jointly with a spouse not active participant in IRA plans MAGI phase-out limit is $178,000-$188,000.
Contribution limit to IRA accounts has changed for 2013 and comes to $5,500 for taxpayers under 50, and $6,500 for taxpayers age 50 and over.
Roth IRAs Phase-Out Range
The new Modified Adjusted Gross Income (MAGI) limits affecting deductions for Roth IRA contributions in 2013 are: Singles and Heads of Household - $112,000-$127,000, Married Filing Jointly - $178,000-$188,000, Married Filing Separately - $0-$10,000.
Contribution limit to IRA accounts has changed for 2013 and comes to $5,500 for taxpayers under 50, and $6,500 for taxpayers age 50 and over.
Child Tax Credit
Child Tax Credit remains at $1,000 per child and this credit has been extended permanently. Child Tax Credit phase-out begins for Single and Head of Household at $75,000, for Married Filing Jointly at $110,000 and for Married Filing Separately at $55,000.
Estate and Gift Tax Exclusion
The exclusion for the estate tax is indexed for inflation and for 2013 will equal to $5,250,000. The gift tax exclusion remains unchanged in 2013 at $14,000.
Same Sex Couples
In 2013 IRS has finally recognized same sex couples for federal tax purposes. If you are in a same-sex marriage, you can file Married Filing Jointly returns not only for 2013, but also amend it for all prior years you were married (if that brings you any tax advantage). Please note, that living together same-sex couples are not automatically considered married. Official marriage must be recorded before you can start filing MFJ on your tax returns. Please refer to your state laws on same sex marriage.