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 or visit To file your simple or complicated federal taxes with TaxAct, go to

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Upcoming Tax Dates

October 10 — Everyone
Federal Holiday (Columbus Day) - Details

October 11 — Employees who work for tips
If you received $20 or more in tips during September, report them to your employer - Details

October 13 — Communications and air transportation taxes under the alternative method (special September deposit rule).
Deposit the tax included in amounts billed or tickets sold during the period beginning September 12 and ending September 15.

October 14 — Regular method taxes (special September deposit rule).
Deposit the tax for the last 4 days of September.

October 17 — Individuals
If you have an automatic 6-month extension to file your income tax return for 2015, file Form 1040, 1040A, or 1040EZ and pay any tax, interest, and penalties due - Details

October 17 — Partnerships
Electing large partnerships: File a 2015 calendar year return (Form 1065-B). This due date applies only if you were given an additional 6-month extension - Details

October 17 — Social security, Medicare, and withheld income tax
If the monthly deposit rule applies, deposit the tax for payments in September.

October 17 — Nonpayroll withholding
If the monthly deposit rule applies, deposit the tax for payments in September.

October 26 — Communications and air transportation taxes under the alternative method.
Deposit the tax included in amounts billed or tickets sold during the last 15 days of September.

October 28 — Regular method taxes
Deposit the tax for the first 15 days in October.

October 31 — Certain small employers
Deposit any undeposited tax if your tax liability is $2,500 or more for 2016 but less than $2,500 for the third quarter.

October 31 — Federal unemployment tax
Deposit the tax owed through September if more than $500.

October 31 — Form 720 taxes.
File Form 720 for the third quarter of 2016.

October 31 — Wagering tax
File Form 730 and pay the tax on wagers accepted during September.

October 31 — Heavy highway vehicle tax
File Form 2290 and pay the tax for vehicles first used in September.

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