Key tax law changes

The majority of this year's key tax law changes were the result of two acts - the Affordable Care Act of 2010, also known as Obamacare, and the American Taxpayer Relief Act of 2012.

The easiest way to navigate all the tax law changes and determine if you qualify for hundreds of tax benefits, is to use an online or mobile tax preparation solution. The programs ask easy questions, covering all available credits and deductions to help minimize your tax liability and maximize your refund. Leading solutions such as TaxAct also provide guidance for the implications of the Affordable Care Act on your taxes and health insurance situation.

If your modified adjusted gross income (MAGI) is under $200,000 ($250,000 if filing jointly), you may benefit from several tax breaks that have been extended or made permanent.

  • The standard deduction for married taxpayers filing jointly is now permanently increased and expands the 15 percent tax bracket.
  • The child tax credit is $1,000 for each child under age 17 on Dec. 31. The amount decreases at higher income levels. A portion of the credit also remains refundable through 2017. In addition, the maximum amount of expenses for the Child and Dependent Care Credit has been made permanent at $3,000 for one child and $6,000 for two or more children.
  • The American Opportunity Credit, tuition deduction, student loan interest deduction, and $2,000 annual contribution limit to Coverdell Education Savings Accounts are still available for 2013.
  • Elementary and secondary educators can again deduct up to $250 in related job expenses, even if you don't itemize deductions. Unlike most employee expenses, educator expenses are not reduced by 2 percent of your adjusted gross income.
  • If you pay mortgage insurance premiums, also known as private mortgage insurance (PMI), you may be able to deduct premiums as mortgage interest.
  • The Alternative Minimum Tax was created to ensure wealthy taxpayers receiving large tax benefits pay some tax. It will now be adjusted for inflation each year so fewer taxpayers are subject to the tax. The exemption amount rises in 2013 to $51,900 ($80,800 for married couples filing jointly). For married individuals filing separately, the exemption is $40,400.
  • You may qualify for a credit equal to up to $12,970 of your adoption expenses including fees, court costs, attorney fees, traveling expense and other expenses directly related to and for the principal purpose of the legal adoption of an eligible child. 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.
  • 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.
  • Qualified dividends will be taxed at preferential capital gains rates rather than those used for ordinary income.
  • If your MAGI is more than $200,000 ($250,000 if filing jointly), you may pay an additional Medicare surtax on earned income, as well as higher taxes on net investment income, long-term capital gains and qualified dividends. The amount of your personal exemptions and itemized deductions is also less starting this year. The marginal income tax rate for incomes above $400,000 ($450,000 if filing jointly) also increases from 35 percent to 39.6 percent for 2013.
  • One change affecting taxpayers of all income levels is the increased floor for deducting medical expenses. Taxpayers under the age of 65 can now only deduct unreimbursed medical and dental expenses that exceed 10 percent of your adjusted gross income (AGI). The floor remains at 7.5 percent if you're 65 or older.

Learn more about these tax law changes in Publication 17 at www.irs.gov or visit www.TaxAct.com/taxinfo. To file your simple or complicated federal taxes with TaxAct, go to www.TaxAct.com.

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Upcoming Tax Dates

February 10 — Social security, Medicare, and withheld income tax
File Form 941 for the fourth quarter of 2017. This due date applies only if you deposited the tax for the quarter timely, properly, and in full.

February 10 — Certain small employers
File Form 944 to report social security and Medicare taxes and withheld income tax for 2017. This due date applies only if you deposited the tax for the year timely, properly, and in full.

February 10 — Farm employers
File Form 943 to report social security and Medicare taxes and withheld income tax for 2017. This due date applies only if you deposited the tax for the year timely, properly, and in full.

February 10 — Federal unemployment tax
File Form 940 for 2017. This due date applies only if you deposited the tax for the year timely, properly, and in full.

February 10 — Employees who work for tips
If you received $20 or more in tips during January, report them to your employer Details

February 15 — All businesses
Give annual information statements to recipients of certain payments you made during 2017 Details

February 15 — Social security, Medicare, and withheld income tax
If the monthly deposit rule applies, deposit the tax for payments in January.

February 15 — All employers
Begin withholding income tax from the pay of any employee who claimed exemption from withholding in 2017, but did not give you Form W4 to continue the exemption this year.

February 15 — Individuals
If you claimed exemption from income tax withholding last year on the Form W-4, you must file a new Form W-04 by this date to continue your exemption for another year Details

February 19 — Everyone
Federal Holiday (Washington's Birthday) Details

February 28 — All businesses
File information returns (for example, Forms 1099) for certain payments you made during 2017.

February 28 — Payers of gambling winnings.
File Form 1096 along with Copy A of all the Forms W2G you issued for 2017. If you file Forms W2G electronically, your due date for filing them with the IRS will be extended to 03-31. The due date for giving the recipient these forms remains 01-31.

February 28 — All employers
File Form W3, Transmittal of Wage and Tax Statements, along with Copy A of all the Forms W2 you issued for 2017. If you file Forms W2 electronically, your due date for filing them with the SSA will be extended to 03-31. The due date for giving the recipient these forms remains 01-31.

February 28 — Large food and beverage establishment employers
File Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips. Use Form 8027T, Transmittal of Employer's Annual Information Return of Tip Income and Allocated Tips, to summarize and transmit Forms 8027 if you have more than one establishment. If you file Forms 8027 electronically, your due date for filing them with the IRS will be extended to 03-31.

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