New Tax Rules That May Affect Your 2013 Return

The 2013 tax filing season, which was delayed for ten days by last year’s government shutdown, officially opened on Jan. 31. But the shutdown didn’t affect the tax filing deadline: you’re still required to file your return, or file for an extension, by April 15. That means it’s time to gather your W-2s, your 1099s and receipts for your charitable contributions and get to work.

Here’s what’s new to keep in mind as you file your 2013 return:

Top earners will pay more tax on their 2013 income. Legislation enacted in January 2013 resurrected the top rate of 39.6% for taxable income over $400,000 ($450,000 for married couples). And taxpayers in this bracket will now pay a 20% rate on long-term capital gains and dividends, up this year from the maximum 15% rate for lower-income taxpayers. Congress also revived phaseouts of itemized deductions and personal exemptions for taxpayers with adjusted gross income of $250,000 or more, or $300,000 for married couples.

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Separately, provisions in the Affordable Care Act could raise taxes for those who have a large amount of investment income. The ACA introduced a 3.8% surtax on unearned income, including dividends, royalties, rents and capital gains. This surtax affects single taxpayers with modified adjusted gross income of $200,000 or more, or married joint filers with MAGI of $250,000 or more. The surtax will be based on your investment income or the amount that your MAGI (which includes investment income) exceeds the threshold, whichever is less.

Joint returns for married same-sex couples. This year, for the first time, couples who were legally married anywhere that recognizes same-sex marriage must file their federal tax returns as either married filing jointly or married filing separately. (For most couples, filing jointly results in a lower tax bill, especially if one spouse earns significantly more than the other. But dual-income couples who earn about the same amount could find themselves paying more than if they could still file as single people.)

Legally married same-sex couples who live in a state that doesn’t recognize same-sex marriages should plan on spending extra time on their tax returns this year. Those couples will be required to file joint (or married filing separately) tax returns with the IRS, but they may be required to file as single with their states. Since states typically base tax returns on federal tax returns, these couples may have to create “dummy” federal tax returns as single filers before they can complete their state tax returns. A few states that don’t allow same-sex marriage either require or permit residents to file joint returns if they were married in jurisdictions that permit same-sex matrimony. See our Guide to State Filing Status for Same-Sex Couples for details for your state.

Self-employed workers will find it easier to figure the home-office deduction. In the past, many self-employed workers rejected this money-saving deduction because it was complicated to figure and was widely viewed as an audit red flag. But a change that took effect in 2013 makes it easier to claim this tax break and lessens the chance of an audit.

New IRS rules allow self-employed taxpayers to deduct their home offices by using a simple formula based on the size of their offices. Under this method, you can deduct $5 per square foot, up to a maximum of 300 square feet, or $1,500.

The rule doesn’t change eligibility requirements for the deduction. You must use the space regularly and exclusively for business. If you’re an employee who works from home, you can’t deduct a home office unless your employer requires you to work there. But you’ll no longer have to fill out an IRS form listing your actual expenses, such as the percentage of utilities used in your home office. You’ll still have the option of using your actual expenses, which could deliver a larger deduction. Just be sure to save your receipts.

Itemizers face a higher threshold for medical deductions on their 2013 returns. Most taxpayers will only be allowed to deduct unreimbursed medical expenses that exceed 10% of their adjusted gross income, up from 7.5% in the past. The 7.5% threshold still applies to taxpayers who were 65 or older at the end of 2013. (On joint returns, the lower threshold applies if either spouse meets the age test.) You must itemize to claim this deduction.

Taxpayers will have to get by with less help from the IRS. If you have a question for the IRS, be prepared to wait a while. In fiscal year 2013, the IRS answered only 61% of calls from taxpayers, and the average wait time to get an answer was nearly 18 minutes, according to IRS taxpayer advocate Nina Olson. Despite increased responsibilities, the IRS has fewer employees than it had four years ago, Olson says. Taxpayers may be able to get answers to their questions at www.irs.gov; the Web site’s “Where’s My Refund” tool also allows people to track their refunds. You can check the status of your refund within 24 hours after the IRS has received your e-filed return or within four weeks after you’ve mailed a paper return.