What's New for Federal Income Taxes for 2013?
NEW YORK ( MainStreet) Here are some tax facts and figures for 2013 that you will need to know when doing year-end tax planning:
SAME SEX MARRIAGES
The Supreme Court overturned the Defense of Marriage Act (DOMA) . The Court decided that the federal government has no right to deny benefits to same-sex individuals who have married and reside in a state that has legalized same-sex marriage.
As a result of the decision, same-sex couples, who are legally married and reside in states that permit same-sex marriage, will be able to prepare their federal and state tax returns as a married couple, using married person tax law, same as any other married couple.
THE STANDARD DEDUCTION
- Single/Married Filing Separate = $6,100
- Married/Qualifying Widow(er) = $12,200
- Head of Household = $8,950
The Standard Deduction for a dependent is the greater of (1) $1,000, or (2) the sum of $350 and the individual's earned income (up to $6,100).
The additional Standard Deduction amount for the age 65 or older or blind is $1,200 for married individuals and $1,500 for Single and Head of Household.
The personal exemption is $3,900.
THE PEP REDUCTION OF PERSONAL EXEMPTIONS
Personal exemptions are reduced by 2% for each $2,500 ($1,250 if Married Filing Separate), or portion thereof, that a taxpayer's AGI exceeds $250,000 for Single filers, $275,000 for Head of Household, $300,000 for Married Filing Joint and $150,000 for Married Filing Separate.
ALLOWABLE MEDICAL DEDUCTIONS
For taxpayers under age 65, medical expenses are deductible on Schedule A only to the extent that the total allowable expenses exceed 10% of Adjusted Gross Income. The exclusion remains at 7.5% of AGI for taxpayers under age 65.
LONG-TERM CARE INSURANCE PREMIUM AGE-BASED DEDUCTION LIMITS
- Age 40 or less = $360
- Age 41-50 = $680
- Age 51-60 = $1,360
- Age 61-70 = $3,640
- Age 71 + older = $4,550
THE STANDARD MILEAGE ALLOWANCE
- Business Mileage = 56.5 cents per mile
- Medical and Moving Mileage = 24 cents per mile
- Charitable Mileage = 14 cents per mile
THE PEASE REDUCTION OF ITEMIZED DEDUCTIONS
Itemized deductions are reduced by 3% of the amount a taxpayer's AGI exceeds $250,000 for Single filers, $275,000 for Head of Household, $300,000 for Married Filing Joint and $150,000 for Married Filing Separate. The reduction cannot exceed 80% of total itemized deductions (not including any deductions for medical expenses, investment interest, and casualty, theft or gambling losses).
CONTRIBUTION LIMITS FOR TAX-DEFERRED PENSION PLANS
- IRA = $5,500
- IRA Catch-Up Contributions at age 50 and older = $1,000
- SIMPLE Plan = $12,000
- SIMPLE Catch-Up Contributions at age 50 and older = $2,500
- 401(k), 403(b), Profit Sharing Plans = $17,500
- 401(k), 403(b), Profit Sharing Plans Catch-Up Contributions at age 50 and older = $5,500
TAX RATE SCHEDULES