What is new for 2013? As most legislation is decided later in the year, there are a few updates that are made available early in the year. These updates are as follows:
Standard Deduction for 2013:
MFJ = $12,200
Single or MFS = $6,100
Head of Household = $8,950
The additional amounts for each person blind or age 65 and older, will be $1,200 for MFJ, Qualified Widow and MFS. Single or HOH will be $1,500.
Personal exemption amounts for each person will be $3,900.
Itemized deductions begin to phase out when a taxpayer's Adjusted Gross Income reaches, $300,000 for MFJ or QW. Taxpayers with Head of Household filing begin to phase out at $275,000. A single taxpayer's phase-out begins at $250,000 and a taxpayer filing Married Filing Separate phases out at $150,000.
One question I am frequently asked is if a taxpayer is required to file. In 2013, if you are single and make more than $11,000 you will need to file a tax return. If you are married filing a joint return and make more than $20,000 you will need to file a tax return. If you worked and did not earn these amounts, but had taxes taken out of your income, you should file a tax return to get a refund of the taxes withheld.
If you are self-employed, it doesn't matter how much you make, any amount of profit will be subject to self-employment tax. This tax is after the income has been taxed. Meaning, even if you do not have any tax liability, the self-employment tax will cause you to have a tax liability.
To find out more about when to file a tax return, go to the IRS website and type "When to File" in the search engine.
Tracy Bunner is an enrolled agent and tax preparer with an office in Harrisville. She can be reached at 801-686-1995 or firstname.lastname@example.org.