1 / 57

Guide to 2013 Federal Tax Changes & Issues

Stay informed on key changes to Federal Tax Law in 2013 including new provisions, due dates, form updates, and important issues. Topics covered range from medical deduction limits, capital gains, sale of bonds, new taxes, to standard deduction and exemptions. Plus, learn about the impact of the Defense of Marriage Act (DOMA) ruling on same-sex couples and how to handle amendments effectively.

morton
Download Presentation

Guide to 2013 Federal Tax Changes & Issues

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Federal Tax Law, Form Changes, & Issues for 2013

  2. Federal Tax Law Changes 2013 • New Provisions • Indexing • Extenders • Form Changes • Issues • Due Dates NTTC Training – 2013

  3. Medical Deduction Limits • Taxpayers under 65 can deduct only amount of unreimbursed medical and dental expenses that exceeds 10%of AGI (was 7.5%) • If 65 or older, threshold remains 7.5% until 2017 NTTC Training – 2013

  4. Capital Gains • Until 2011 only Sch D, then Added F 8949 • 3 year enforcement to have brokers reflect “cost basis” • “Covered” applies to any asset purchased after 2010 (stock)/2011 (mutual/DRIPs) • Retains A (basis provided) coding • Retains B (No basis provided) coding NTTC Training – 2013

  5. Capital Gains • Retains C – no 1099-B provided coding • 14 codes in column f (See 4012) • New 20% rate for higher income taxpayers ($200,000 +) NTTC Training – 2013

  6. Sale of Bonds • Sale (redemption) of bonds at maturity In-scope • Pub 4491, p 107 states OOS • TPs who have sold any assets other than stock, mutual funds, and a personal residence • Should have included bonds NTTC Training – 2013

  7. New Taxes • Medicare tax on high incomes • Net investment income tax (NIIT)for high income taxpayers • Both apply if AGI exceeds • $200,000 Single or HH • $250,000 MFJ or QW • $125,000 MFS • Both out of scope NTTC Training – 2013

  8. Social Security Tax Rate • Employee portion of social security tax returns to 6.2% (was 4.2% for 2011–2012) • Applies to self-employment tax too • Full social security rate now 12.4% • Total S-E tax rate 15.3% NTTC Training – 2013

  9. Standard Deduction and Exemption Increases • $6,100 – Single or MFS • $7,600 – Single >65 or blind • $8,950 – HH • $10,150 – HH >65 or blind • $12,200 – MFJ or QW • $13,400 – MFJ, QW >65 or blind • Exemptions increase to $3,900 NTTC Training – 2013

  10. Standard Mileage Rates 2013 • 56.5¢ per mile – business miles • 24¢ per mile – medical miles • 14¢ per mile – charitable miles NTTC Training – 2013

  11. EIC Maximum Creditsand Income • $6,044 – three or more qualifying children • $5,372 – two qualifying children • $3,250 – one qualifying child • $487 – no qualifying child • $46,227 ($51,567 MFJ) 3 qualifying children • $43,038 ($48,378 MFJ) 2 qualifying children • $37,870 ($43,210 MFJ) 1 qualifying child • $14,340 ($19,680 MFJ) no qualifying child Max Credit Max Income NTTC Training – 2013

  12. Defense of Marriage Act Ruling • Same-sex couples – legally married by state or foreign law are married for federal tax returns • State (or country) where married is key – not state of residence • Must file either MFJ or MFS for 2013 and onward as long as married (except if eligible for HH) • Taxpayers may, but are not required to, amend up to three years’ returns from S/HH/QW to MFJ/MFS/QW • Changes in employer benefit plans can affect amended return NTTC Training – 2013

  13. DOMA – Supreme Court Ruling • Domestic partnerships or civil unions not included • Rules for community property apply as per state law • State law governs state tax returns NTTC Training – 2013

  14. DOMA Ruling Impact – Amending Returns • Standard provisions for amending returns apply • Trained on year being amended and use TaxWise for year being amended • Amend only taxpayer’s return by adding spouse’s name, SSN, dependents, income, expenses, refund/balance due information and explanation of changes • No action required on spouse’s return NTTC Training – 2013

  15. DOMA • Federal 1040 accepts same sex marriages • State of Virginia does not • Many questions to be resolved so look for updates • Handling of such situation, If VA allows separate submissions, THEN NTTC Training – 2013

  16. DOMA • Carefully select who is TP (only 1 reference and should be most complex) • Complete Taxwise 1040 • On MIS remove state designation • Check Box indicating “No State return” • File MFJ NTTC Training – 2013

  17. DOMA • E-File as Federal only. • After acceptance : • Convert original TP MFJ into a single return (Single, HoH) • Change Fed return from “e-file” to “paper” • Re-insert VA designation • Remove check in box “No state return" NTTC Training – 2013

  18. DOMA • Remove all spousal income, adjustments, deductions, etc. • Insert any new appropriate entries • Designate return as “State Only” • Unlink from any Federal return • QR and submit NTTC Training – 2013

  19. DOMA • Remove For Spouse: • Create a new Federal return as a new TP • Filing status, most likely Single • Set MIS status as for former TP • Ensure complete QR performed • Submit individually (Ensure return is Unlinked from federal) NTTC Training – 2013

  20. DOMA Problems • Due to delay in submission and acceptance of Federal: • TP’s may have to return to complete • If not practical, file paper return and have them mail NTTC Training – 2013

  21. In or Out of Scope • In scope: • Distributions from a SEP/SIMPLE IRA that are fully taxable • Roth IRA distributions that are wholly nontaxable, including a converted Roth IRA • Wash sale loss disallowed if identified as such on the 1099-B, brokerage or mutual fund statement (Cap Gn Wkt adjustment code W) NTTC Training – 2013

  22. Debit Card Conversion • State issued 450,000, recalled 250,000 • Activated w birth date and last 4 SSN • Problems • Compared to state DMV data bank • When a Jr. and Sr. at same address NTTC Training – 2013

  23. Debit Card Conversion • Expected TP to not pay fee via bank • Advise TP to use retailer OR • Use terms “Cash out” or “withdraw” in lieu of “transfer” with bank NTTC Training – 2013

  24. National Mortgage Settlement • Taxpayers may receive a settlement payment in 2013 • Relates to a home lost in foreclosure 2008 - 2011 • Must be COD certified or refer to paid preparer NTTC Training – 2013

  25. Indexing NTTC Training – 2013

  26. Deductible Long-Term Care Premium Limits • Qualified long-term care premiums includible as medical expense (Sch A) • $360 – Age 40 or under • $680 – Age 41 to 50 • $1,360 – Age 51 to 60 • $3,640 – Age 61 to 70 • $4,550 – Age 71 and over NTTC Training – 2013

  27. Other Indexing • HSA Limits • $3,250 self-only coverage • $6,500 family coverage • Both + $1,000 if age 55 or older • Retirement savings credit income limits • Max $29,500, $59,000 MFJ, $44,250 HH • Max investment income for EIC $3,300 NTTC Training – 2013

  28. Other Indexing • IRA contributions • Max $5,500 ($6,500 if age 50 or older) • Modified AGI limits when covered by employer plan • Lifetime learning credit income limits • Excludible savings bond interest – out of scope • Foreign earned income exclusion NTTC Training – 2013

  29. Extenders/Extentions No Changes NTTC Training – 2013

  30. Extended Provisions 2013 • Tax-free distribution from IRAs to public charities for individuals age 70½ or older • COD exclusion for principal residence • Educator classroom Adjustment ($250) • Tuition and fees Adjustment ($4K maximum ended 31 December 2013) NTTC Training – 2013

  31. Extended Provisions • Premiums for mortgage insurance deductible as interest for qualified residence • Deduction for state and local general sales taxes • Nonbusiness energy property credit NTTC Training – 2013

  32. Form Changes • Schedule C • Schedule D • K-1 • F 2106 EZ • 1099-DIV NTTC Training – 2013

  33. Schedule C • Expense limit raised to $10,000 • Standard C-EZ rules apply • No loss • No inventory • No employees • No depreciation or asset write-off • No home office deductions, etc. • Can have multiple Sch Cs per taxpayer NTTC Training – 2013

  34. Form Changes • Sch D new lines if all transactions on statement are Code A or D – basis reported to IRS with no adjustments • Continue to enter all capital gains/losses on Capital Gains Worksheet in TaxWise • TaxWise will carry to proper forms/lines • Taxwise will not add codes D, E, & F NTTC Training – 2013

  35. No Codes D, E, F NTTC Training – 2013

  36. Form Changes • Foreign Tax Credit on Sch K-1 In-scope if defined as passive income and below excess limits (FTC slide 24) • Check page 2 of form for location NTTC Training – 2013

  37. Form 8949 1099 Codes 2012 codes were for short or long-term: • Transactions reported on Form(s) 1099-B showing basis was reported to IRS • Transactions reported on Form(s) 1099-B showing basis was not reported to IRS • Transactions other than code A or B Pub 4012 – Pg 14 NTTC Training – 2013

  38. Form 8949 1099 Codes For 2013: • A, B and C now apply to short-term only • D, E and F are long-term equivalents • Continue to report on TaxWise Capital Gains Worksheet • Enter A, B or C as before – TaxWise will carry to correct Form 8949 based on dates entered NTTC Training – 2013

  39. Form 8453s • Pub 3189, pg 19: A second copy of Form 8453 and attachments must be retained until December 31st • ERO must promptly mail one copy to Austin and one copy to local SPEC office (SPEC to provide postage-paid mailing labels) • Attaching pdf to return is acceptable alternative if have secure scanning capability TRS Webinar – November 2013

  40. Form 2106-EZ • 2106-EZ In-scope with Sch A • Use to report employee Bus expense, line 21 if: • Ordinary and necessary expenses • No employer reimbursement • Standard mileage only • See top of form NTTC Training – 2013

  41. Form 2106-EZ NTTC Training – 2013

  42. Form 1099-DIV Changes • Section 1250 Gain, Box 2b In scope • Collectibles 28% Gain, Box 2d In Scope • Section 1202 Gain – OOS • Amounts in these boxes will carry over automatically to Sch D from Div statement NTTC Training – 2013

  43. Form 1099-DIV Changes NTTC Training – 2013

  44. Issues • Activity Reporting • AARP Portal Usage • Debit Card • Care Giver 1099-MISC • Amended Returns NTTC Training – 2013

  45. Issues • Activity Reporting important for AARP Tax-Aide funding • Complete lines 11-14, Preference sheet • Ensure list anytime you assist a TP • Question • Return • At site , home, online, etc. NTTC Training – 2013

  46. Issues • AARP volunteer Sharenet primary source for communication, reimbursement, etc. • Two portals • http:// fake email • http://www.aarp.org/sk/taxaide • 2 weeks reimbursement if DD NTTC Training – 2013

  47. Caregiver Income Forms • TP has 1099-MISC or Cash to declare • Family member not in their business • Yes, No SE tax, report on line 21 • No, Must pay SE, report Sch C • Cash wages - $1800, no W-2 • Report line 7, via worksheet 1 NTTC Training – 2013

  48. Amended Returns • CO’s must have been certified in 2012 • We are not required to do amended • if didn’t create prior year return • If does not contain our error entry • If site capacity a factor • Can have them return at later date NTTC Training – 2013

  49. Due Dates • Returns are due Tuesday, April 15, 2014 • 2014 estimated payments due • April 15, 2014 • June 15, 2014 • September 15, 2014 • January 15, 2015 NTTC Training – 2013

  50. Health Care Reform Legislation • Patient Protection & Health Care Act & Education reconciliation Act • 2700 page laws • 15,000 pages regulations • Several implemented in 2012 • Some impacting us in 2013, 2014, NTTC Training – 2013

More Related