2013 Individual Federal Income Tax Return Changes

Standard mileage rates. The 2013 rate for business use of your car is increased to 56½ cents a mile. The 2013 rate for use of your car to get medical care is increased to 24 cents a mile. The 2013 rate for use of your car to move is increased to 24 cents a mile.

Change in tax rates. The highest tax rate is 39.6%.

Net Investment Income Tax. Beginning in 2013, you may be subject to Net Investment Income Tax (NIIT). The NIIT is 3.8% of the smaller of (a) your net investment income or (b) the excess of your modified adjusted gross income over:

  • $125,000 if married filing separately,
  • $250,000 if married filing jointly or qualifying widow(er), or
  • $200,000 if any other filing status.

Tax rate on net capital gain and qualified dividends. The maximum tax rate of 15% on net capital gain and qualified dividends has increased to 20% for some taxpayers.

Medical and dental expenses. You can deduct only the part of your medical and dental expenses that is more than 10% of your adjusted gross income (7.5% if either you or your spouse is age 65 or older).

Personal exemption amount increased for certain taxpayers. Your personal exemption is increased to $3,900. But the amount is reduced if your adjusted gross income is more than:

  • $150,000 if married filing separately,
  • $250,000 if single,
  • $275,000 if head of household, or
  • $300,000 if any other filing status.

Limit on itemized deductions. You may not be able to deduct all of your itemized deductions if your adjusted gross income is more than:

  • $150,000 if married filing separately,
  • $250,000 if single,
  • $275,000 if head of household, or
  • $300,000 if any other filing status.

Same-sex marriages. If you have a same-sex spouse whom you legally married in a state (or foreign country) that recognizes same-sex marriage, you and your spouse generally must use the married filing jointly or married filing separately filing status on your 2013 return, even if you and your spouse now live in a state (or foreign country) that does not recognize same-sex marriage.

Health flexible spending arrangements (FSAs). You cannot have more than $2,500 in salary reduction contributions made to a health FSA for plan years beginning after 2012.

Expiring credits. The plug-in electric vehicle credit and the refundable part of the credit for prior year minimum tax have expired. You cannot claim either one on your 2013 return.

Pnzi-type investment schemes. There are new rules for how to claim a theft loss deduction on Form 4684 due to a Ponzi-type investment scheme.

Home office deduction simplified method. If you can take a home office deduction, you may be able to use a simplified method to figure it. See Publication 587.

Additional Medicare Tax. Beginning in 2013, a 0.9% Additional Medicare Tax applies to Medicare wages, railroad retirement (RRTA) compensation, and self-employment income that are more than:

  • $125,000 if married filing separately,
  • $250,000 if married filing jointly, or
  • $200,000 for any other filing status.

More

EITC

All Workers Claiming the EITC Must:

  • Have a valid Social Security number,
  • Not file as “married filing separate,”
  • Not file Form 2555 or Form 2555-EZ (related to Foreign Earned Income),
  • Meet the investment income limitation ($3,200 or less for tax year 2012),
  • Have earned income,
  • Not be the qualifying child of another person,
  • Generally, be a U.S. citizen or resident alien for the entire year.

 

To Claim EITC With a Qualifying Child, the Child Must Pass All of the Following Tests:

  • Relationship
    • A son or daughter (including an adopted child or child placed for adoption)
    • Stepchild
    • Foster child placed by an authorized placement agency or court
    • Brother, sister,  half brother, half sister, stepbrother, stepsister or a descendant of any of them
  • Age, at the end of the filing year, the child was:
    • Younger than the worker (or the worker’s spouse if married filing jointly) and 
      • younger than 19,
      • or, younger than 24 and a full-time student
    • Any age if permanently and totally disabled
  • Residency
    • Child must live with the worker, or the worker’s spouse if filing a joint return, in the United States* for more than half of the year.
  • Joint Return
    • The child can not have filed a joint return, unless the child and the child’s spouse did not have a filing requirement and filed only to claim a refund.

Note: For EITC, the qualifying child does not need to meet the support test under the Uniform Definition of a Child. See Understanding Who is a Qualifying Child.

 

Warning: Only one person can claim the same qualifying child for EITC and other tax benefits.  If more than one person claims the same child, IRS applies the tiebreaker rules. Read more about the tiebreaker rules here.

 

To Claim EITC Without a Qualifying Child, You, and Your Spouse if you File a Joint Return:

  • Must have lived in the United States for more than half of the tax year,
  • Either you (or your spouse if filing a joint return) must be at least age 25 but less than age 65
  • Cannot qualify as the dependent of another person.

 

*Special rules apply for members of the Military on extended duty outside the United States.  See the Military section on the Special Rules for EITC page on irs.gov  for more information.

Tie Breaker Rules

Only one person can use the same qualifying child. If a child is the qualifying child of more than one person, only one person can claim the child as a qualifying child for all of the following tax benefits:

  • EITC
  • Dependency Exemption for the Child,
  • Child tax credit,
  • Head of household filing status,
  • Credit for child and dependent care expenses, and
  • Exclusion for dependent care benefits.

 

The other person(s) cannot take any of the six tax benefits listed above unless he or she has a different qualifying child.* If they cannot agree on who claims the child as a qualifying child, and more than one person claims tax benefits using the same child, the tiebreaker rule explained below applies.  If the other person is a spouse and they file a joint return, this rules does not apply.

Under the Tiebreaker Rule, the Child is Treated as a Qualifying Child Only By:

  •  The parents, if they file a joint return;.
  • The parent, if only one of the persons is the child’s  parent;
  • The parent with whom the child lived the longest during the tax year, if two of the persons are the child’s parent and they do not file a joint return together;
  • The parent with the highest adjusted gross income (AGI) if the child lived with each parent for the same amount of time during the tax years, and they do not file a joint return together;
  • The person with the highest AGI, if no parent can claim the child as a qualifying child; or
  • A person with the higher AGI than any parent who can claim the child as a qualifying child but does not.

Source

2013 Federal Individual Tax Return Forms, Instructions and News

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Form 1040, U.S. Individual Income Tax Return

Annual income tax return filed by citizens or residents of the United States.

Instructions for Form 1040

Forms and Schedules for Form 1040

2013 news
Change in tax rates.
The highest tax rate for 2013 is 39.6%.
Tax rate on net capital gain and quali­fied dividends.
The maximum tax rate
of 15% on net capital gain and qualified
dividends has increased to 20% for some
taxpayers. The Qualified Dividends and
Capital Gain Tax Worksheet in the
line 44 instructions reflects this new,
higher rate.
Additional Medicare Tax.
Beginningin 2013, a 0.9% Additional Medicare
Tax applies to Medicare wages, railroad
retirement (RRTA) compensation, and
self-employment income that are more
than:
$125,000 if married filing separately,
$250,000 if married filing jointly,
or
$200,000 if single, head of household, or qualifying widow(er).

 

Net Investment Income Tax.
Beginning in 2013, you may be subject to Net
Investment Income Tax (NIIT). The
NIIT is 3.8% of the smaller of (a) your
net investment income or (b) the excess
of your modified adjusted gross income
over:
$125,000 if married filing separately,
$250,000 if married filing jointly or qualifying widow(er), or
$200,000 if single or head ofhousehold.

 

Filing status for same­sex marriedcouples.
If you have a same-sex spouse
whom you legally married in a state (or
foreign country) that recognizes
same-sex marriage, you and your spouse
generally must use the married filing
jointly or married filing separately filing
status on your 2013 return, even if you
and your spouse now live in a state (or
foreign country) that does not recognize
same-sex marriage.
Medical and dental expenses.
You candeduct only the part of your medical and
dental expenses that is more than 10%
of your adjusted gross income (7.5% if
either you or your spouse was born be-
fore January 2, 1949).
Personal exemption amount increased
for certain taxpayers.
Your personalexemption is increased to $3,900. But
the amount is reduced if your adjusted
gross income is more than:
$150,000 if married filing separately,
$250,000 if single,
$275,000 if head of household, or
$300,000 if married filing jointly
or qualifying widow(er).
Limit on itemized deductions.
Youmay not be able to deduct all of your
itemized deductions if your adjusted
gross income is more than:
$150,000 if married filing separately,
$250,000 if single,
$275,000 if head of household, or
$300,000 if married filing jointly
or qualifying widow(er).

 

Credit for prior year minimum tax.
The credit for prior year minimum tax is
no longer partly refundable.
Standard mileage rates.
The 2013 ratefor business use of your vehicle is in-
creased to 56 cents a mile. The 2013rate for use of your vehicle to get medical care or to move is increased to 24cents a mile.
Identity Protection Personal Identifi­
cation Number (IP PIN).
If you are filing electronically and both you and

your spouse received an IP PIN.

When To File Form 4868 for 2011 Federal Tax Return – Due Dates, Penalties and Interests

File Form 4868 by April 17, 2012. Fiscal year taxpayers, file Form
4868 by the regular due date of the return.

Taxpayers who are out of the country. If, on the regular due date
of your return, you are out of the country and a U.S. citizen or
resident, you are allowed 2 extra months to file your return and pay
any amount due without requesting an extension. For a calendar
year return, this is June 15, 2012. File this form and be sure to
check the box on line 8 if you need an additional 4 months to file
your return.
If you are out of the country and a U.S. citizen or resident, you
may qualify for special tax treatment if you meet the foreign
residence or physical presence tests. If you do not expect to meet
either of those tests by the due date of your return, request an
extension to a date after you expect to qualify using Form 2350,
Application for Extension of Time To File U.S. Income Tax Return.

You are out of the country if:
• You live outside the United States and Puerto Rico and your main
place of work is outside the United States and Puerto Rico, or
• You are in military or naval service outside the United States and
Puerto Rico.
If you qualify as being out of the country, you will still be eligible
for the extension even if you are physically present in the United
States or Puerto Rico on the regular due date of the return.
For more information on extensions for taxpayers out of the
country, see Pub. 54, Tax Guide for U.S. Citizens and Resident
Aliens Abroad.

Form 1040NR or 1040NR-EZ filers. If you cannot file your return by
the due date, you should file Form 4868. You must file Form 4868
by the regular due date of the return.
If you did not receive wages as an employee subject to U.S.
income tax withholding, and your return is due June 15, 2012,
check the box on line 9.

Total Time Allowed
Generally, we cannot extend the due date of your return for more
than 6 months (October 15, 2012, for most calendar year
taxpayers). However, there may be an exception if you are living
out of the country. See Pub. 54 for more information.

Filing Your Tax Return
You can file your tax return any time before the extension expires.
Do not attach a copy of Form 4868 to your return.
Interest
You will owe interest on any tax not paid by the regular due date of
your return, even if you qualify for the 2-month extension because

you were out of the country. The interest runs until you pay the tax.
Even if you had a good reason for not paying on time, you will still
owe interest.

Late Payment Penalty
The late payment penalty is usually ½ of 1% of any tax (other than
estimated tax) not paid by April 17, 2012. It is charged for each
month or part of a month the tax is unpaid. The maximum penalty
is 25%.
The late payment penalty will not be charged if you can show
reasonable cause for not paying on time. Attach a statement to
your return fully explaining the reason. Do not attach the statement
to Form 4868.
You are considered to have reasonable cause for the period
covered by this automatic extension if at least 90% of your actual
2011 tax liability is paid before the regular due date of your return
through withholding, estimated tax payments, or payments made
with Form 4868.

Late Filing Penalty
A late filing penalty is usually charged if your return is filed after the
due date (including extensions). The penalty is usually 5% of the
amount due for each month or part of a month your return is late.
The maximum penalty is 25%. If your return is more than 60 days
late, the minimum penalty is $135 or the balance of the tax due on
your return, whichever is smaller. You might not owe the penalty if
you have a reasonable explanation for filing late. Attach a
statement to your return fully explaining the reason. Do not attach
the statement to Form 4868.

Read more

Extensions of Time to File Your Tax Return – Form 4868

There are three ways you can request an automatic extension of time to file a U.S. individual income tax return:

  • you can electronically file Form 4868 (PDF), Application For Automatic Extension of Time To File U.S. Individual Tax Return;
  •  you can pay all or part of your estimate of income tax due using a credit or debit card; or
  •  you can file a paper Form 4868 by mail.

If you file your Form 4868 electronically you will receive an acknowledgement or confirmation number for your records and you do not need to mail in Form 4868. If you need to pay additional taxes when filing Form 4868 electronically, you may do so through the outside service provider or through e-file. You can refer to your tax software or tax professional for ways to file electronically using e-file services. Several companies offer free filing of Form 4868 through the Free File program that you can access on the IRS.gov website. If you wish to file electronically, be sure to have a copy of last year’s tax return. You will be asked to provide the Adjusted Gross Income from the return for taxpayer verification.

A second way of requesting an automatic extension of time to file your individual income tax return is to pay part or all of your estimate of income tax due by credit card or debit card. You may pay by phone or Internet through one of the service providers listed on Form 4868. Each service provider will charge a convenience fee based on the amount of the tax payment. At the completion of the transaction, you will receive a confirmation number for your records.

You can also request an automatic extension of time to file your individual income tax return by completing paper Form 4868 and mailing it to the appropriate address provided on the Form.

Extension of time to file is NOT an extension of time to pay.

Read  more

U.S. Citizens and Resident Aliens Abroad – Extensions of Time to File Federal Tax Return

You may be allowed an automatic 2-month extension of time to file your return and pay any federal income tax that is due. You will be allowed the extension if you are a U.S. citizen or resident alien and on the regular due date of your return:

  • You are living outside of the United States and Puerto Rico and your main place of business or post of duty is outside the United States and Puerto Rico, or
  • You are in military or naval service on duty outside the United States and Puerto Rico

To use this automatic 2-month extension, you must attach a statement to your return explaining which of the two situations listed earlier qualified you for the extension.

Read more

If you are unable to file your return within the automatic 2-month extension period, you may be able to get an additional 4-month extension of time to file your return, for a total of 6 months. The automatic 2-month and the 6-month extension start at the same time. You do not have to request the 6-month extension until the new due date allowed by the first extension, but the total combined extension will still only be 6 months from the regular due date.

A 6-month extension of time to file is not an extension of time to pay. You must make an accurate estimate of your tax and send any necessary payment with your Form 4868 or pay the tax due by credit card. If you find you cannot pay the full amount due with Form 4868, you can still get the extension. You will owe interest on the unpaid amount.

You also may be charged a penalty for paying the tax late unless you have reasonable cause for not paying your tax when due. Interest and penalties are assessed (charged) from the original due date of your return.

Read more

  • Taxpayers abroad. U.S. citizens and resident aliens who live and work abroad, as well as members of the military on duty outside the U.S., have until June 15 to file and pay. However, interest is still due on any tax payment made after April 17.
  • Members of the military and others serving in Iraq, Afghanistan or other combat zone localities. Typically, taxpayers can wait until at least 180 days after they leave the combat zone to file returns and pay any taxes due. For details, see Extensions of Deadlines in Publication 3, Armed Forces Tax Guide.
  • People affected by certain tornadoes, severe storms, floods and other recent natural disasters. Currently, parts of Indiana, Kentucky, Tennessee and West Virginia are covered by federal disaster declarations, and affected individuals and businesses in these areas have until May 31 to file and pay.

Read more

Check Federal Tax Refund Status with IRS2Go – Smartphone Application for Mobile Devices (Android, iPhone)

Download the IRS2Go App

If you have an Apple iPhone or iTouch, you can download the free IRS2Go app by visiting the iTunes app store.

If you have an Android device, you can visit the Android Marketplace to download the free IRS2Go app.

Available features:

Get Your Tax Record
You can request your tax return or account transcript using your smartphone. IRS2Go allows you to request this information, which will be mailed to you within several business days.

Get Your Refund Status
You can check the status of your federal income tax refund using IRS2Go. Simply enter your Social Security Number, which will be masked and encrypted for security purposes, then select your filing status and enter the amount of your anticipated refund from your 2011 tax return. If you e-file your return, you can check your refund status within a few days. If you file a paper tax return, you will need to wait three to four weeks to check your refund status because it takes longer to process a paper return.


 

Exemption From Withholding – Form W-4 by February 15

If you claim exemption from withholding, your employer will not withhold federal income tax from your wages. The exemption applies only to income tax, not to social security or Medicare tax.

An exemption is good for only 1 year.   You must give your employer a new Form W-4 by February 15 each year to continue your exemption.

To claim exemption, you must give your employer a Form W-4. Do not complete lines 5 and 6. Enter “Exempt” on line 7.

If you claim exemption, but later your situation changes so that you will have to pay income tax after all, you must file a new Form W-4 within 10 days after the change. If you claim exemption in 2012, but you expect to owe income tax for 2013, you must file a new Form W-4 by December 1, 2012.

You can claim exemption from withholding for 2012 only if both of the following situations apply.

-     For 2011 you had a right to a refund of all federal income tax withheld because you had no tax liability.

-    For 2012 you expect a refund of all federal income tax withheld because you expect to have no tax liability.

Students

If you are a student, you are not automatically exempt. See chapter 1 to find out if you must file a return. If you work only part time or only during the summer, you may qualify for exemption from withholding.

Age 65 or older or blind.

If you are 65 or older or blind, use Worksheet 1-3 or 1-4 in chapter 1 of Publication 505, to help you decide if you qualify for exemption from withholding. Do not use either worksheet if you will itemize deductions, claim exemptions for dependents, or claim tax credits on your 2012 return. Instead, see Itemizing deductions or claiming exemptions or credits in chapter 1 of Publication 505.

Form W-4

Source: IRS

 

2012 EITC Income Limits and Maximum Credit Amounts

Earned Income and adjusted gross income (AGI) must each be less than:

  • $45,060 ($50,270 married filing jointly) with three or more qualifying children
  • $41,952 ($47,162 married filing jointly) with two qualifying children
  • $36,920 ($42,130 married filing jointly) with one qualifying child
  • $13,980 ($19,190 married filing jointly) with no qualifying children

Tax Year 2012 maximum credit:

  • $5,891 with three or more qualifying children
  • $5,236 with two qualifying children
  • $3,169 with one qualifying child
  • $475 with no qualifying children

Investment income must be $3,200 or less for the year.

For more information on whether a child qualifies you for  EITC, see Publication 596, Chapter 2, Rules If You Have a Qualifying Child.

The Tax Relief and Job Creation Act signed into law December of 2010 provides a temporary increase in EITC and expands the credit for workers with three or more qualifying children. These changes are temporary and apply to 2009, 2010, 2011 and 2012 tax years.

IRS

2011 EITC Income Limits and Maximum Credit Amounts

Earned Income and adjusted gross income (AGI) must each be less than:

  • $43,998 ($49,078 married filing jointly) with three or more qualifying children
  • $40,964 ($46,044 married filing jointly) with two qualifying children
  • $36,052 ($41,132 married filing jointly) with one qualifying child
  • $13,660 ($18,740 married filing jointly) with no qualifying children

Tax Year 2011 maximum credit:

  • $5,751 with three or more qualifying children
  • $5,112 with two qualifying children
  • $3,094 with one qualifying child
  • $464 with no qualifying children

Investment income must be $3,150 or less for the year.

The Tax Relief and Job Creation Act signed into law December of 2010 provides a temporary increase in EITC and expands the credit for workers with three or more qualifying children. These changes are temporary and apply to 2009, 2010, 2011 and 2012 tax years.

The Education Jobs and Medicaid Assistance Act of 2010 signed into law August 10, 2010 repealed the Advance EITC.  It was not available to workers after December 31, 2010.

More on Irs.gov