There aren’t too many across-the-board changes affecting taxpayers filing their 2013 returns. However, that doesn’t mean there aren’t any major changes – or that higher income brackets won’t be paying more.
The George W. Bush era tax cuts are going away for those in the upper income brackets, and there are new taxes to help pay for health care reform. Various income thresholds have been established for these new taxes. For example, an additional 0.9 percent Medicare tax will be levied on earnings over $250,000 for married couples filing jointly, and for singles earning more than $200,000. Investment income will be subject to a 3.8 percent tax, and higher income taxpayers will also wave goodbye to certain itemized deductions and exemptions.
Middle and lower income taxpayers probably won’t see a big difference from last year’s tax bill, although many will benefit from changes to the tax code. The Alternative Minimum Tax (AMT), which has hovered over middle-income Americans for several years, has been fixed once again – dare we say permanently – to prevent it from affecting unintended targets. And changes have been made to make it easier to make home office deductions. Here’s an overview of some key changes.
Tax filing season begins on Jan. 31 –a little later than usual because of the government shutdown. The deadline remains April 15, and the experts recommend filing as soon as possible to give identity thieves less chance to hijack your Social Security number to file a fake return.
The comments above are general and are not an exhaustive list of all the changes or a substitute for professional advice from a tax expert.