Critical Changes to Consider When Filing 2013 Taxes - Taxes | Financial Buzz

Critical Changes to Consider When Filing 2013 Taxes

Tax, Earnings, Deductable, TaxesFor most people, filing the 2013 taxes will be similar to how they filed taxes in 2012. There were minimal changes, and those changes will be felt by some parts of the population. High income individuals are targeted for taxes this year-with increase in taxes related to capital gains and Medicare surtax. Restrictions are imposed on itemized deductions for the high earners and a new Net Income Investment Tax are put in force.

According to Kelly Phillips Erb, tax attorney, tax rates are going back to levels which were in force about 10 years back, before Bush cut the tax rate. It is going to be very painful for those within the ambit of the new laws.

High income earners to be taxed more

The tax rate is highest for those taxpayers earning in excess of $400,000 per year-increasing to 39.6 percent from 35 percent in 2012. The same segment will see the rate of maximum capital gains to increase from 15 percent to 20 percent and there will be other new taxes and a loss of applicable deductions.

The biggest change on taxpayers outside the top earning bracket is the increase in medical expenses created to deduct the same expenses. In previous years, taxpayers could deduct medical costs which reached 7.5 percent of their total income. The new starting point is 10 percent. According to Erb, a larger number of people will be unable to claim expenses relating to medical needs.

Probable errors from your part on tax returns

You may make mistakes while filing tax returns. Indeed, the Internal Revenue Service (IRS) had discovered about 2.7 million errors done by 22 million tax paying individuals in their 2011 returns.

Financialbuzz, News Simple errors: This involves typing in mismatched Social Security number or even reducing the length of the number by a digit. There can be subtraction and addition errors and also entering the right information in the wrong line. In a sentence, it is not wise to rush filing the tax return.
Financialbuzz, News Improper claiming of dependents: A dependent is defined as a person who financially depends on another individual. Examples of dependents are spouse or children and showing them on the tax form can help you get exemptions and credits. To make it clear, someone is dependent on you if you sponsor more than half of the life support related expenses. In big families, this can get quite confusing.

Couples of the same sex who are married in states where such unions are recognized may file their return as married, and can file jointly or separately. This holds true even in those states who considers such marriages as illegal.