Since tax code changes were made so late in 2012 to avoid the federal budget “fiscal cliff,” the Internal Revenue Service announced then there would be a delay in accepting tax returns and there could be an additional delay if some of the specific changes affect your return. The IRS recently announced that it now is able to process returns it previously was unable to accept, which means all the returns that were being stockpiled now are to be processed normally.
Among the changes you might be interested in are:
- The standard mileage rate deduction rose from 55 1/2 cents for 2012 to 56 1/2 cents for 2013.
- The medical and moving mileage rates rose from 23 cents to 24 cents for the same years.
- The charitable work mileage rate remains 14 cents.
Increases to the maximum contributions for retirement accounts include:
- Individual retirement account – From $5,000 for 2012 to $5,500 for 2013. For savers age 50 and older, the limit rose from $6,000 to $6,500 for the same years.
- 401(k) – From $17,000 for 2012 to $17,500 for 2013. For savers age 50 and older, the limit rose from $22,500 to $23,000 for the same years.
- SIMPLE IRAs – From $11,500 for 2012 to $12,000 in 2013. For savers age 50 and older, the limit rose from $14,000 to $14,500 for the same years.
Now, to cover some not-so-good news: If the tax changes stay the same, there are going to be more phaseouts for personal and dependent exemptions and some itemized deductions. These include:
- For married couples with an adjusted gross income of $300,000 or more, for individual qualifying as head of households with an AGI of $275,000 or more, and for single taxpayers with an AGI of $250,000 or more, there will be an exemption reduction of 2 percent over those AGI thresholds.
- For itemized deductions, there will be limitations for those in the income levels above. The limitations include home mortgage interest, charitable deductions, property taxes and state income tax paid. These will be reduced by 3 percent of AGI over the levels above.
A final note: Scams and identity theft problems now include bogus emails that look as if they were sent by the IRS. These emails are trying to obtain your personal and financial information for fraudulent purposes. The IRS has been sending out emails warning against opening these emails, which include look-alike IRS email addresses ending in .net, .com and .org. If you receive such an email, do not open it or click on any links; instead, notify the IRS at firstname.lastname@example.org.
The information in this article is general in nature and should not be acted upon without first checking to determine its applicability to your situation.
Mary Currie is a certified public accountant practicing in Rocky Mount.