What’s New In Taxes For Your 2013 Return?

| December 20, 2013

shutterstock_62054950What’s New

Our tax experts at M J Mortensen Assoc have listed some of the important tax changes that took effect in 2013. For the latest information about the tax law topics covered in this article please call Janie Mortensen or John McKusker at (703) 641-8302 or email [email protected] or J[email protected]

Additional Medicare Tax. Beginning in 2013, a 0.9% Additional Medicare Tax applies to Medicare wages, railroad retirement (RRTA) compensation, and self-employment income that are more than:
$125,000 if married filing separately,
$250,000 if married filing jointly, or
$200,000 for any other filing status.

Net Investment Income Tax. Beginning in 2013, you may be subject to Net Investment Income Tax (NIIT). The NIIT is 3.8% of the smaller of (a) your net investment income or (b) the excess of your modified adjusted gross income over:

$125,000 if married filing separately,
$250,000 if married filing jointly or qualifying widow(er), or
$200,000 if any other filing status.

Change in tax rates. The highest tax rate is 39.6%. Tax rate on net capital gain and qualified dividends. The maxi-mum tax rate of 15% on net capital gain and qualified dividends has in-creased to 20% for some taxpayers.

Medical and dental expenses. You can deduct only the part of your medical and dental expenses that is more than 10% of your adjusted gross income (7.5% if either you or your spouse is age 65 or older).

Personal exemption amount increased for certain taxpayers. Your personal exemption is in-creased to $3,900. But the amount is reduced if your adjusted gross income is more than:

$150,000 if married filing separately,
$250,000 if single,
$275,000 if head of house-hold, or
$300,000 if any other filing status.
Limit on itemized deductions. You may not be able to deduct all of your itemized deductions if your adjusted gross income is more than:

$150,000 if married filing separately,
$250,000 if single,
$275,000 if head of house-hold, or
$300,000 if any other filing status.

Same sex marriages. If you have a same sex spouse whom you legally married in a state (or foreign country) that recognizes same-sex marriage, you and your spouse generally must use the married filing jointly or married filing separately filing status on your 2013 re-turn, even if you and your spouse now live in a state (or foreign country) that does not recognize same-sex marriage
If you meet certain requirements, you may be able to file amended returns to change your filing status for some earlier years

Health flexible spending arrangements (FSAs). You cannot have more than $2,500 in salary reduction contributions made to a health FSA for plan years beginning after 2012.

Expiring credits. The plug-in electric vehicle credit and the re-fundable part of the credit for prior year minimum tax have expired. You cannot claim either one on your 2013 return

Ponzi type investment schemes. There are new rules for how to claim a theft loss deduction on Form 4684 due to a Ponzi type investment scheme

Home office deduction simplified method. If you can take a home office deduction, you may be able to use a simplified method to figure it.

Standard mileage rates. The 2013 rate for business use of your car is increased to 56.5 cents a mile
The 2013 rate for use of your car to get medical care is in-creased to 24 cents a mile.
The 2013 rate for use of your car to move is increased to 24 cents a mile.

Janie mortensen at the officeFor answers to all your tax questions, feel free to contact our Enrolled Agents at MJ Mortensen Assoc. We are a full service public accounting firm located in Fairfax, Virginia. We have over 40 years experience with tax issues and are members of the National Association of Enrolled Agents. Give us a call at (703) 641-8302 or  email [email protected].

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