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Thursday, January 30, 2014

Events in 2013 that may affect your tax teturn

The time for taxes is right around the corner

It’s that time of year...again! Tax season is coming back around and Americans will soon be getting their documents together. In fact, according to reports, some people are already submitting their paperwork to tax preparers! Don’t rush though: the government shutdown contributed to the start of tax season being delayed by 10 days. Like last year, the tax season will not begin until January 31st, and the IRS has cautioned tax filers that they will not be processing any tax returns before that date.

W2s are used when filing taxes with the IRS
Form W2 details Social Security, Medicare and state tax payments

Yearly tax developments

Every year new rulings and regulations are issued that taxpayers should be aware of in order to make good choices with money and their investments. 2013 was no different. If you work with a good accountant or CPA, they will be aware of these changes and be able to advise you on how to adjust accordingly.

If you handle your own taxes, it can be hard to keep track of new developments in the tax industry. Sometimes CPA firms and accountants will post the latest changes on their site for taxpayers to be aware of. A tax firm out of Columbia, SC, Burkett, Burkett & Burkett, regularly updates a public blog with tax developments from each quarter to try to keep their tax clients in the know. As you make financial plans and decisions, a site like this may be useful.
Here are some of the tax developments of 2013:
  • In January 2013, the American Taxpayer Relief Act of 2012 (ATRA) was signed into law by President Obama. ATRA made some of the Bush-era tax cuts for lower to middle income-earners permanent, while extending expiring provisions through the end of 2013. With no plan in place for many of these to continue, over 50 provisions expired at the beginning of 2014.
  • The Supreme Court ruled that section 3 of the Defense of Marriage Act (DOMA) was unconstitutional. One impact of this ruling is that the IRS will recognize same-sex spouses who are legally married as married for tax purposes. This is the case regardless of whether the spouses live in a state that recognizes that marriage, and means that all legally married same-sex couples must file taxes using either "married filing jointly" or "married filing separately" status.

    Gay Marriage
    Same gender unions are now tax deductible
  • With the bumpy roll out of the Affordable Care Act (ACA), there have been a lot of changes in requirements and regulations. The IRS has issued a document on its website in an effort to answer some common questions about the health insurance premium tax credit, which aims to make health insurance more affordable for people within 400% of the federal poverty level who don’t qualify for Medicare.
  • The IRS released final regulations on the additional Medicare tax established by the ACA.
  • Final regulations were issued allowing taxpayers to figure out if the expense of tangible property is deductible or considered “capital expense.”

This is only a top-level view of a handful of changes that occurred over the last year. If you have a reason to believe that 2013 developments may affect you or your business when you file your taxes, it’s a good idea to either look into the details. Or, you could consider hiring a tax professional like the one from Columbia, SC that we mentioned above. They are trained to help determine your best options and can even help you plan a strategy moving forward.

About the author: David Tooley is a freelance blogger who writes for blogs such as Financial Times Digest.  He wishes he would have gotten his CPA license so he could spend more time getting paid to do taxes instead of paying others to do his.

Image licenses: Joseanavas, CC BY 2.0,  401(K) 2013, CC BY-SA 2.0