We keep track of all the tax law changes so you don't have to. TaxACT 2013 federal and state products have all the latest tax law changes to help you get your maximum guaranteed refund the fastest way possible!
This new tax applies to investment income, such as interest, dividends, capital gains, rental and royalty income.
The 3.8% tax is in addition to the tax you already pay on investment income. If you pay 20% tax on a long-term capital gain, your total tax on the gain is 23.8% (20% + 3.8%).
You only pay this tax if your modified adjusted gross income is $200,000 or more ($250,000 if filing jointly, or $125,000 if married filing separately). Your investment income is reduced by expenses that you can allocate to your investment income, including investment interest expense, advisory and brokerage fees, and rental and royalty expenses. It is also reduced by state and local income taxes that you can allocate to investment income items.
If you're a nonresident alien, you are not subject to the additional 3.8% tax.Print
The most you can contribute to one of these plans is now $2,500. Your spouse can also contribute $2,500 if he or she meets the qualifications.Print
It's harder to take a medical expense deduction in 2013. You can now only deduct medical expenses for you, your spouse, and your dependents to the extent that your total medical expenses exceed 10% of your adjusted gross income. If your adjusted gross income is $50,000, for example, you can only deduct medical expenses that exceed $5,000 ($50,000 X 10% = $5,000).
If you are age 65 or older, you can still deduct total medical expenses that exceed 7.5% of your adjusted gross income. For example, if your adjusted gross income is $50,000, you can only deduct medical expenses that exceed $3,750 ($50,000 X 7.5% = $3,750).This is true for both you and your spouse, as long as one of you is over age 65.Print
Starting with the 2013 tax year, if you are in a legal same-sex marriage, you are married for federal tax purposes and must file a joint or separate return. You cannot use the Single filing status.
You are in a legal marriage if you were legally married in a state that recognizes same-sex marriages. Registered domestic partnerships and civil unions do not qualify. Once you are legally married, it does not matter for federal tax purposes if you move to another state.
If you were in a same-sex marriage in prior years, you may be able to file an amended federal tax return for 2010, 2011, and 2012. You are not required to file an amended return.Print
If you earn more than $200,000 in wages, compensation, and self-employment income, you must pay the Additional Medicare Tax of 0.9% on your earnings over the limit. If you file jointly, you and your spouse can earn a total of $250,000 before you pay this tax. If you are married and filing separately, the Additional Medicare Tax applies to your earned income over $125,000.
Your employer withholds the Additional Medicare Tax from your pay. If you earn more than $200,000 from one employer, they deduct an additional 0.9% tax on your wages over $200,000.
The amount of additional Medicare tax your employer withholds may often be more or less than the amount you owe. For example, if you work for more than one employer and you earn less than $200,000 from each of them, neither employer withholds the additional tax. In that case, you pay the Additional Medicare Tax in addition to your other tax liability.
You cannot claim exemption from having the Additional Medicare Tax withheld from your pay. You can adjust your other income tax withholding if you expect your total tax, including the additional tax, to be more or less than the amount your employer withholds.
Your employer reports the additional 0.9% tax withheld from your pay on Form W-2. You enter this information in TaxACT, and the program reconciles the amount your employer withheld and the amount you actually owe on your tax return.
If you are self-employed, you should include the additional 0.9% in your estimated tax payments to avoid owing penalties and interest when you file.Print
If your taxable income is more than $400,000 ($450,000 if you file jointly, $425,000 if head of household, or $225,000 if married filing separately), your new tax bracket is 39.6% - up from 35%. This is the marginal rate - the rate you pay on your taxable income over these limits.Print
If you're in the new, higher income tax bracket, your new tax rate on capital gains and dividends is 20% - up from 15%.Print
If you have a high adjusted gross income, you may not be able to take all your itemized deductions, thanks to the Pease provision. Itemized deductions start to phase out at $250,000 ($300,000 if filing jointly, $275,000 if head of household, or $150,000 if you are married filing separately). Your itemized deductions are reduced by 3% of your adjusted gross income over these amounts, but they are never reduced by more than 80% of your otherwise allowable deductions.Print
Your personal exemptions for yourself, your spouse, and your dependents reduce your taxable income by $3,900 each. If your adjusted gross income is over $250,000 ($300,000 if filing jointly, $275,000 for head of household, or $150,000 if you are married filing separately), your personal exemptions are reduced by 2% for each $2,500 or portion over these amounts.Print
The exemption amount for the AMT has been increased regularly by Congress. Starting in 2012, AMT exemption amounts are tied to inflation so annual “patches” to the amount will no longer be needed.Print
This provision increases the standard deduction for married taxpayers filing jointly, and expands the 15% tax bracket.Print
The maximum amount of child and dependent care expenses eligible for the credit is now $3,000 if you have one child, or $6,000 if you have two or more children. These increased amounts are permanent.Print
The credit is now permanent and indexed to inflation. For 2013, the maximum Adoption Credit is $12,970.Print
The new, permanent contribution limit is $2,000 per year.Print
If your paycheck doesn't go quite as far as it used to, the expiration of the payroll tax holiday may be part of the reason. If your wages stay the same, your 2013 net pay is 2% lower than it was in 2012. Your employer must deduct 6.2% for your share of Social Security tax, instead of the temporarily lower 4.2% in 2011 and 2012.Print
The standard mileage rates for the use of your car or other vehicle is 56.5 cents per mile for business, 24 cents per mile driven for medical or moving purposes, and 14 cents per mile for charitable travel.Print
The maximum amount of your earned income on which you pay Social Security tax is now $113,700. When you reach that amount with one employer, they should stop withholding Social Security tax from your pay until the following year. If you work for more than one employer, and your total earnings are more than $113,700, TaxACT calculates a credit for any overpayment of Social Security taxes.Print
The standard amount you can deduct from income if you don't itemize your deductions is $6,100 ($12,200 for married couples filing jointly, or $8,950 if you file as head of household).Print
The personal exemption for 2013 is $3,900, up from $3,800. Each exemption for yourself, your spouse (if you file jointly), and your dependents reduces your taxable income by $3,900.Print
The Alternative Minimum Tax (AMT) exemption amount rises in 2013 to $51,900 ($80,800, for married couples filing jointly). For married individuals filing separately, the AMT exemption is $40,400.Print
If you have three or more qualifying children, the maximum Earned Income Credit you can receive for 2013 is $6,044 (up from $5,891 in 2012). With two children, the maximum amount is $5,372, and with one child, it is $3,250. If you have no children, your maximum Earned Income Credit for 2013 is $487.Print
If your employer provides a benefit for transit passes and transportation in a commuter highway vehicle (such as a vanpool), your maximum tax-free benefit is now $245 per month.Print
You may qualify for a credit equal to up to $12,970 of your adoption expenses. If your employer provides adoption benefits, you may also be able to exclude up to the same amount from your income. Both a credit and exclusion may be claimed for the same adoption, but not for the same expense.Print
The amount of unearned income certain children can have before they pay tax at their parents' rates has gone up. Children can now have up to $2,000 in unearned income before they are subject to “kiddie tax” rules. Depending on the child's age and whether he or she is a student, kiddie tax rules may apply to children up to age 23.Print
If you qualify, you can exclude up to $97,600 of your foreign earned income from your taxable income for 2013. If you and your spouse both work in a foreign country and meet the qualifications, you may each be able to exclude up to $97,600.Print
You may be able to exclude all or part of the interest from qualifying Series EE or Series I bonds if you use the income for qualified educational expenses. You cannot take this benefit if your modified adjusted gross income is than $89,700 or more ($142,050 if you file jointly, or if you file as Qualifying Widow(er) with Dependent Child).Print
Forgiven debt is normally taxable income - even if the debt is from losing your underwater home by foreclosure or short sale. With the discharge of qualified principal residence exclusion, however, you generally don't have to pay tax on the difference between your mortgage balance and the amount of money the bank receives from the sale of the home.Print
If you're a teacher or other educator, you can still deduct up to $250 in related job expenses as an adjustment to income, even if you don't itemize deductions. Unlike most employee expenses, educator expenses are not reduced by 2% of your adjusted gross income.Print
If you pay mortgage insurance premiums, also known as private mortgage insurance (PMI), you may be able to deduct the premiums as mortgage interest.Print
For 2013, you can still deduct state and local sales taxes. You can take this deduction or a deduction for state income tax - but not both.Print
The American Opportunity Tax Credit expanded on the Hope Credit. The income limits are higher, the credit is available for more qualified expenses, and you can use the credit for four years of post-secondary education instead of just two. In addition, you can even get a refund if you don't owe any tax for up to 40% of the credit ($1,000).Print
You can still deduct tuition expenses as an adjustment to income, even if you don't itemize your deductions. You generally take the tuition expense deduction if you don't qualify for an education credit or other tax break for the same expenses.Print
The IRA qualified charitable distribution (QCD) provision has been extended. If you are age 70 ½ or older, this exclusion allows you to make direct distributions from your traditional IRA to a charity without recognizing the distribution as income. (You cannot take a charitable deduction.)Print
December 10 (Employees who work for tips)
If you received $20 or more in tips during November, report them to your employer
December 16 (Corporations)
Deposit the fourth installment of estimated income tax for 2013
December 25 (Everyone)
Federal Holiday (Christmas Day)