January 24, 2014
 

It's Tax Time!

Comment January 24, 2014 by Dick L. 


Since 2004, Triangle Credit Union has been helping those who qualify for the Earned Income Tax Credit (EITC) with free tax preparation help as part of the IRS’s Volunteer Income Tax Assistance (VITA) program.

In 2013, members of the VITA team at Triangle helped over 330 individuals from the Greater Nashua and Manchester communities claim more than half a million dollars in refunds and credits. We’re pleased to announce the return of the VITA program to Triangle, on January 25th, at 9am at our Franklin St, Nashua office.

Here, VITA Site-Coordinator, Triangle’s own, Dick Lavoie, kicks off a series of Tax-themed blog posts detailing some of the changes for tax year 2013.

Ah yes, two things we can count on in this world are that: 1) we will all leave sooner or later; and 2) paying one’s Income Taxes. It’s that time of the year, to prepare your Federal Income Taxes. Triangle Credit Union will again be offering free tax preparation service through the Internal Revenue Service (IRS) Volunteer Income Tax Assistance (VITA) program at our Franklin St. branch in Nashua. We will begin on Saturday January 25, 2014 and continue for (9) consecutive Saturdays, ending on Saturday March 22, 2014. No appointment necessary, we will be offering the free tax prep service from 9:00 AM until 3:00 PM on each of those Saturdays. The IRS will begin accepting tax returns electronically on Friday January 31, 2014.

What are the changes for tax year 2013?

Due Date-

The due date for the US Individual income tax Return for 2013 is April 15, 2014.

Income Limits for Excluding Education Savings Bond Interest-

For 2013, the amount of interest exclusion is phased out for Married Filing Jointly taxpayers or Qualifying Widow(er) taxpayers whose Modified Adjusted Gross Income (MAGI) is between $112,050 and $142,050. If the MAGI is $142,050 or more, no deduction is allowed. For Single and Head of Household filing statuses, the interest exclusion is phased out for taxpayers whose MAGI is between $74,700 and $89,700. If the MAGI is $89,700 or more, no deduction is allowed.

Standard Deduction Increases-

The standard deduction for taxpayers who do not itemize deductions on Schedule A has increased. The standard deduction amounts for 2013 are:

  • $12,200- Married Filing Jointly or Qualifying Widow(er)
  • $8,950- Head of Household
  • $6,100- Single or Married Filing Separately

Taxpayers who are 65 and Older or are Blind-

  • For 2013, the standard deduction for these taxpayers increased:
  • $1,200- Married Filing Jointly, Married Filing Separately, or Qualifying Widow(er) •· $1,500- Single or Head of Household

Expiration of Temporary Decrease in Employee’s Share of Payroll Tax-

For 2013, social security tax is withheld from an employee’s wages at a rate of 6.2% up to the social security wage limit of $113,700. There is no change to Medicare withholding. The same change applies to net earnings from self-employment – the rate returns to 12.4% up to the social security wage limit of $113,700.

Exemption Amount-

The amount a taxpayer can deduct for each exemption is $3,900 for 2013.

Retirement Savings Contribution Credit Income Limits Increased-

In order to claim this credit, your MAGI must not be more than $29,500 ($59,000 if Married Filing Jointly; $44,250 if Head of Household).

Earned Income Credit (EIC) Amount of Credit Increased-

For 2013, the maximum credit is: •· $6,044 with three or more qualifying children •· $5,372 with two qualifying children •· $3,250 with one qualifying child •· $487 with no qualifying child

Earned Income Amount Increased-

To be eligible for a full or partial credit, the taxpayer must have earned income of at least $1 but less than: •· $46,227 ($51,567 if Married Filing Jointly) with three or more qualifying •· $43,038 ($48,378 if Married Filing Jointly) with two qualifying children •· $37,870 ($43,210 if Married Filing Jointly) with one qualifying child •· $14,340 ($19, 680 if Married Filing Jointly) with no qualifying child

Investment Income-

Taxpayers whose investment income is more than $3,300 cannot claim the EIC.

Standard Mileage Rate-

For 2013, the following rates are in effect: •· 56.5 cents per mile for business miles driven •· 24 cents per mile driven for medical or moving purposes •· 14 cents per mile driven in service of charitable organizations

Deduction Amount and MAGI Limit for Traditional IRA Contributions Increased-

For 2013, the maximum IRA deduction increases to $5,500 ($6,500 if age 50 or older). If a taxpayer is covered by a retirement plan at work, the deduction for contributions to traditional IRA is reduced (phased out) if the MAGI is:

  • More than $95,000 but less than $115,000 for a married couple filing joint return or a qualifying widow(er).
  • More than $59,000 but less than $69,000 for a single individual or head of household, or
  • Less than $10,000 for a married individual filing a separate return

If only one spouse is covered by a retirement plan at work, and the taxpayers live together or file a joint return, the deduction is phased out if the MAGI is more than $178,000 but less than $188,000. If the MAGI is $188,000 or more, no deduction for contributions to a traditional IRA is allowed.

Deductible Long-Term Care Premium Limits Increased-

For 2013, the maximum amount of qualified long-term care premiums includible as medical expenses has increased. Qualified long-term care premiums up to the amount shown below can be included as medical expenses on Schedule A Itemized Deductions.

  • $360: age 40 and under
  • $680: age 41 to 50
  • $1,360: age 51 to 60
  • $3,640: age 61 to 70
  • $4,550: age 71 and over

Lifetime Learning Credit Income Limits Increased-

The MAGI threshold at which a lifetime learning credit begins to phase out is $53,000 ($107,000 for Married Filing Jointly). To claim the credit, the taxpayer’s MAGI must be less than $63,000 ($127,000 for Married Filing Jointly).

Additional Medicare Tax-

Additional Medicare tax applies to an individual’s wages, Railroad Retirement Tax Act compensation, and self-employment income that exceeds the threshold amount based on the individual’s filing status. This topic is out of scope for the VITA/TCE program. Taxpayers affected by the additional Medicare tax should be referred to a professional tax preparer. Additional information can be found on www.irs.gov. This is an extensive list of changes for tax year 2013; the volunteers assisting Triangle Credit Union will do a complete analysis of your tax bracket. You can find more detail description of these changes at the IRS website www.irs.gov.

Thank you,

Dick Lavoie VITA Site4 Coordinator Triangle Credit Union

 

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