Transcript aztax-aide.org
Federal Tax Law Changes – Tax Year 2013
TAX-AIDE TAX-AIDE
Federal Tax Law Changes 2013
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New provisions
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Indexing
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Extenders
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Form change
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Due Dates
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Defense of Marriage Act Ruling
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Same-sex couples – legally married by state or foreign law are married for federal tax returns
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State (or country) where married is key – not state of residence
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Must file either MFJ or MFS for 2013 and onward as long as married (except if eligible for HH)
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Taxpayers may, but are not required to, amend up to three years’ returns from S/HH/QW to MFJ/MFS/QW
Changes in employer benefit plans can affect amended return
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DOMA – Supreme Court Ruling
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Domestic partnerships or civil unions not included
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Rules for community property apply as per state law
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State law governs state tax returns
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DOMA Ruling Impact – Amending Returns
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Standard provisions for amending returns apply
Trained on year being amended and use TaxWise for year being amended
Amend only taxpayer’s return by adding spouse’s name, SSN, dependents, income, expenses, refund/balance due information and explanation of changes
No action required on spouse’s return
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In or Out of Scope
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In scope:
Distributions from a SEP/SIMPLE IRA that are fully taxable
Roth IRA distributions that are wholly nontaxable, including a converted Roth IRA
Wash sale loss disallowed if identified as such on the 1099-B, brokerage or mutual fund statement (Cap Gn Wkt adjustment code W)
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In or Out of Scope
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Out of scope (still)
Self-employed medical insurance adjustment (1040 Line 29)
Roth IRA distributions that are partly taxable, including converted Roth IRAs (<59½ or failed to meet the relevant 5 year test)
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Schedule C
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Expense limit raised to $10,000
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Standard C-EZ rules apply
No loss
No inventory
No employees
No depreciation or asset write-off
No home office deductions, etc.
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Can have multiple Sch Cs per taxpayer
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Capital Gains Tax Rate
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New 20% rate for higher income taxpayers
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National Mortgage Settlement
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Taxpayers may receive a settlement payment in 2013
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Relates to a home lost in foreclosure 2008 - 2011
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Must be COD certified or refer to paid preparer
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Medical Deduction Haircut
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Taxpayers can deduct amount of unreimbursed medical and dental expenses that exceeds 10% 7.5%) of AGI (was
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If taxpayer (or spouse) is 65 or older, threshold remains 7.5% (for both)
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New Taxes
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Additional 0.9% Medicare tax on earned income over limit
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Additional 3.8% tax on net investment income when modified AGI is over limit
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Limits for both
$200,000 Single, HH or QW
$250,000 MFJ
$125,000 MFS
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Both out of scope
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Social Security Tax Rate
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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 self-employment tax rate 15.3%
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Standard Deduction
Single MFJ MFS Std Ded $ 6,100 12,200 6,100 + if blind $ 1,500 1,200 ea 1,200* + if ≥65 $ 1,500 1,200 ea 1,200* HH QW 8,950 12,200 1,500 1,200 *also applies to dependent spouse if claimed 1,500 1,200
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Itemized Deductions
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Subject to phase-out if AGI over
$250,000 Single or QW
$300,000 MFJ
$150,000 MFS
$275,000 HH
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Exemption Deduction
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Exemptions increase to $3,900
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Subject to phase-out if AGI over
$250,000 Single or QW
$300,000 MFJ
$150,000 MFS
$275,000 HH
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Standard Mileage Rates 2013
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56.5¢ per mile – business miles
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24¢ per mile – medical miles
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14¢ per mile – charitable miles
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EIC Maximum Credits and Income
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$6,044 – three or more qualifying children
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$5,372 – two qualifying children
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$3,250 – one qualifying child
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$487 – no qualifying child
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$46,227 ($51,567 MFJ) 3 qualifying children
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$43,038 ($48,378 MFJ) 2 qualifying children
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$37,870 ($43,210 MFJ) 1 qualifying child
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$14,340 ($19,680 MFJ) no qualifying child
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Deductible Long-Term Care Premium Limits
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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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Other Indexing
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HSA Limits
$3,250 self-only coverage
$6,450 family coverage
Both + $1,000 if age 55 or older
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Retirement savings credit income limits
Max $29,500, $59,000 MFJ, $44,250 HH
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Max investment income for EIC $3,300
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Other Indexing
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IRA contributions
Max $5,500 ($6,500 if age 50 or older)
Modified AGI limits when covered by employer plan
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Lifetime learning credit income limits
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Excludible savings bond interest – scope out of
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Foreign earned income exclusion
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Extended Provisions 2013
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Tax-free distribution from IRAs to public charities for individuals age 70½ or older
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COD exclusion for principal residence
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Adjustment for educator classroom expenses up to $250
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Adjustment for qualified tuition and fees
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Extended Provisions
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Premiums for mortgage insurance deductible as interest for qualified residence
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Deduction for state and local general sales taxes
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Nonbusiness energy property credit
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Form Changes
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Sch D new lines if all transactions on statement are Code A or D – basis reported to IRS with no adjustments
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But – continue to enter all capital gains/losses on Capital Gains Worksheet in TaxWise
TaxWise will carry to proper forms/lines
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Form 8949 1099 Codes
2012 codes were for short or long-term: A.
B.
C.
Transactions reported on Form(s) 1099 B showing basis was reported to IRS Transactions reported on Form(s) 1099 B showing basis was not reported to IRS Transactions other than code A or B
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Form 8949 1099 Codes
For 2013:
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A, B and C now apply to short-term only
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D, E and F are long-term equivalents
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Continue to report on TaxWise Capital Gains Worksheet
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Enter A, B or C as before – TaxWise will carry to correct Form 8949 based on dates entered
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Form 8453s
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Pub 3189, pg 19: A second copy of Form
8453 and attachments must be retained until December 31st
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ERO must promptly mail one copy to Austin and one copy to local SPEC office (SPEC to provide postage-paid mailing labels)
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Attaching pdf to return is acceptable alternative if have secure scanning capability
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Due Dates
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2013 tax returns are due
Tuesday, April 15, 2014
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2014 estimated payments due
April 15, 2014
June 15, 2014
September 15, 2014
January 15, 2015
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Tax Law Changes 2013 Comments?
Questions?
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