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Several important tax changes went into affect in 2013. Depending on your income, age, marital status, or whether you operate a business, you could be affected.
For example, higher income taxpayers will be impacted by the new top tax bracket of 39.6% and the two additional Medicare taxes, .9% and 3.8%. Taxpayers under age 65 will have a tougher time deducting medical expenses because the floor for deducting medical expenses was increased to 10% from 7.5%.
Beginning January 1, 2014, the standard mileage rate for a car, van, pickup or panel truck, will be reduced to 56 cents per mile for business miles driven during 2014. The rate for 2013 is 56.5 cents per mile.
Medical and moving related miles will also be decreased 1/2 cent to 23.5 cents per mile. The 2013 rate is 24 cents per mile for medical and moving miles.
The 2014 rate for charitable-related miles is 14 cents per mile. This rate is based on statute and hasn't changed for several years.
Unless Congress acts, the first-year expensing limit for qualified business property is scheduled to fall to $25,000 in 2014. The expensing limit for 2013 is $500,000. That's a 95% reduction!
In addition, the phaseout threshold for 2014 is scheduled to fall to $200,000. The threshold for 2013 is $2,000,000. That's a 90% reduction.
Bonus depreciation is scheduled to expire at the end of 2013.
If you made contributions to a retirement plan, including a traditional IRA or Roth IRA, you may be able to claim the retirement savings contribution credit, (referred to as the saver's credit) on your 2013 return.
The maximum tax credit is $1,000 ($2,000 if married filing jointly). The deadline for setting up a new IRA or adding money to an existing one is April 15, 2014. Elective deferrals (contributions) must be made by the end of the year.
The IRS has posted important dates for December 2013 and January 2014 related to retirement plans administered by employers, trustees, and custodians.