2013 Federal Tax Law Changes: Key Provisions and Impact on Taxpayers

1. Federal Tax Law Changes 2013

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

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

4. Capital Gains Tax Rate • New 20% rate for higher income taxpayers NTTC Training – 2013 4

5. New Taxes • Medicare tax on high incomes • Net investment income tax 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 5

6. 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 6

7. 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 7

8. Standard Mileage Rates 2013 • 56.5¢ per mile – business miles • 24¢ per mile – medical miles • 14¢ per mile – charitable miles NTTC Training – 2013 8

9. EIC Maximum Credits and 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 NTTC Training – 2013 9

10. Deductible Long-Term Care Premium Limits • Qualified long-term care premiums includible as medical expense on 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 10

11. 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 11

12. 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 12

13. Extended Provisions 2013 • Tax-free distribution from IRAs to public charities for individuals age 70½ or older • COD exclusion for principal residence • Adjustment for educator classroom expenses up to $250 • Adjustment for qualified tuition and fees NTTC Training – 2013 13

14. 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 14

15. 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 NTTC Training – 2013 15

16. Due Dates • 2013 tax 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 16

17. Tax Law Changes 2013 Comments? Questions? NTTC Training – 2013 17