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“Jen has diligently served our financial planning clients with her tax preparation and accounting expertise. We get only rave reviews about Jen."

Dan Kramer
Managing Director
Kramer Financial Group, LLC

(Tax year 2013)

Due Date

The filing date is April 15, 2014.

Additional Medicare Tax

Beginning in 2013, a .9% additional Medicare Tax applies to Medicare Wages and self-employment income that are more than:
  • $125,000 if married filing separately,
  • $250,000 if married filing jointly, or
  • $200,000 for any other filing status.

Net Investment Income Tax

Beginning in 2013, you may be subject to Net Investment Income Tax (NIIT). The NIIT is 3.8% of the smaller of (a) your net investment income OR (b) the excess of your modified adjusted gross income over:
  • $125,000 if married filing separately,
  • $250,000 if married filing jointly or qualifying widow(er), or
  • $200,000 for any other filing status

Change in tax rates

The highest tax rate is 39.6%. This rate begins for taxpayers whose income is over:
  • $400,000 if single,
  • $425,000 if head of household,
  • $450,000 if married filing jointly,
  • $225,000 if married filing separately

Tax Rate on net capital gain and qualified dividends

The maximum tax rate of 15% on net capital gain and qualified dividends has increased to 20% for the taxpayers who fall into the 39.6% tax bracket (see previous heading for income chart).

Medical and dental expenses

You can deduct only the part of your medical and dental expenses that is more than 10% of your adjusted gross income. Previously, medical expenses were deductible over 7.5% of your AGI. If you, or your spouse, is over 65 years old the 7.5% threshhold remains in effect.

Personal Exemption

Your personal exemption is increased to $3,900. But the amount is reduced if your AGI (adjusted gross income) is more than:

  • $150,000 if married filing separately,
  • $250,000 if single,
  • $275,000 if head of household, or
  • $300,000 for any other filing status.

Limit on itemized deductions

You may not be able to deduct all of your itemized deductions if your AGI is more than:
  • $150,000 if married filing separately,
  • $250,000 if single,
  • $275,000 if head of household, or
  • $300,000 for any other filing status

Foreign Income – Remains the same, but I wanted to remind you:

Please let me know if your foreign assets exceed $100,000 on the last day of 2013 or more than $150,000 at any time during the year.

Also, please let me know if you had foreign bank accounts that exceeded $10,000 (in aggregate) during 2013.

Same-sex marriages

If you have a same-sex spouse whom you legally married in a state (or foreign country) that recognizes same-sex marriage, you and your spouse generally must use the married filing jointly or married filing separately status on your 2013 return, even if you and your spouse now live in a state that does not recognize same-sex marriage.

Health flexible spending arrangements (FSAs)

You cannot have more than $2,500 in salary reduction contributions made to a health FSA for plan years beginning after 2012.

Expiring Credits

The plug-in electric vehicle credit and the refundable part of the credit for prior year minimum tax have expired. You cannot claim either one on your 2013 return.

Permanent AMT patch

The 2012 Act permanently increases the AMT exemption amount for 2013 to $51,900 for unmarried taxpayers, $80,800 for joint filers and $40,400 for married filing separately filers.

Ponzi-type investment schemes

There are new rules for how to claim a theft loss deduction on Form 4684 due to a Ponzi-type investment scheme.

Home office deduction simplified method

If you can take a home office deduction, you may be able to use a simplified method to figure it. Standard mileage rates
  • Business miles: 56 ˝ cents per mile
  • Medical miles: 24 cents per mile
  • Moving miles: 24 cents per mile

Please contact me with any questions you may have,

Jennifer Hack, CPA
Email: jen@jenhack.com
917.903.0187