New Rules for 2014 Taxes
While taxes are certain in life, there is no guarantee that the rules that apply to these taxes will remain the same each year. In fact, 2013 saw a number of IRS changes that will affect many taxpayers, especially those in the upper tax brackets.
Here’s what you need to know this tax season, which opens January 31st:
If your income is above $200,000 (or $250,000 as a married couple filing jointly)…
* All or part of your net investment income may be subject to an additional 3.8% Medicare tax.
* If your income is a combination of salary and self-employment income, you will be responsible for an additional 0.9% Medicare tax (on top of the original 2.9%).
If your income is above $250,000 (or $300,000 as a married couple filing jointly or $275,000 for head of household)…
* Some personal and dependent exemptions might be cut down or eliminated.
* You may lose a portion (up to 3% of your AGI) of your write-offs for various deductions, such as home-mortgage interest, property taxes, charitable donations, and investment expenses.
If your income is above $400,000 (or $450,000 as a married couple filing jointly or $425,000 as head of household)….
* Your federal income tax rate will climb from 35% to 39.6%.
* Your income tax rates on long-term capital gains and dividends will rise from 15% to 20%.
If your individual taxable income is below $36,250 (or below $72,500 as a married couple filing jointly or below $48,600 as head of household)…
* You will pay 0% on long-term gains and dividends.
If you plan on claiming itemized deductions for personal or dependent medical expenses…
* Your expenses must have exceeded 10% of your income (previously this threshold was 7.5%). However, if you are 65 or older, this higher rate won’t take effect until the 2017 tax year.
If you are a married same-sex couple….
* You must file your federal return either as a married couple or as married-filing-separately.
Check the IRS website for a complete rundown of all tax rules this year. And happy filing!
