Thursday, November 14

Tax Tips

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IRS offers advice for filing your 2013 tax returns

The IRS will start accepting and processing tax returns Jan. 31, 2014. The delay is to allow time to update, program and properly test all systems after that process was interrupted by the government shutdown in 2013.

Like last year, the IRS anticipates that most tax refunds will be issued within 21 days after the tax return is received and accepted by the IRS.

Don’t miss these tax benefits

E-file — Using IRS E-file to prepare and file can help ensure that you don’t miss any tax breaks or changes and will eliminate most errors. Plus it speeds up your refund and gives you confirmation that the IRS got your tax return. For many, e-filing can be free using brand-name software at IRS.gov through the Free File program. And anyone can use IRS fillable forms to prepare and e-file their return free at IRS.gov.

Free tax help — Most lower-income and older taxpayers are eligible for free tax preparation and e-filing at sites staffed by IRS-trained volunteers. To locate the site closest to you, visit IRS.gov and search for “Volunteer Tax Help” or call the United Way at 211 or the IRS at 1-800-906-9887. Senior citizens can call AARP directly at 888-227-7669 for site locations.
Tax credit for lower-income workers — The Earned Income Tax Credit (EITC) generally is for people who worked part or all of the year but didn’t make a lot of money. For 2013, a married couple filing jointly with three eligible children may qualify if they made less than $51,567. EITC, worth up to $6,044, is highest for married couples with children, but couples without children and single filers can also qualify. People in rural areas and working grandparents raising grandchildren sometimes miss this valuable tax credit.

Sales tax deduction — If you itemize deductions, you have the option of deducting either state and local income taxes or sales taxes you paid. Since most Tennessee residents don’t pay state income tax, the sales tax deduction is the logical choice for most of the state’s tax filers. Yet in 2012, about 64,000 Tennesseans who itemized could have taken the sales tax deduction but did not. The IRS makes it easy to take this deduction by providing tables that estimate your deduction based on your income and family size.

What’s new?

  • Beginning with the 2013 tax year, you can use a simplified option when figuring the deduction for business use of your home. The new option simplifies the calculation and recordkeeping requirements for the deduction.
  • The 2013 standard deduction rises to $6,100, up $150 from 2012. For married couples filing jointly, it rises to $12,200, up $300. The personal exemption is $3,900 per person, up $100.
  • The 2013 rate for business use of your vehicle is 56.5 cents per mile; the rate for use of your vehicle to get medical care or to move is 24 cents per mile. For using your vehicle to help a qualified charity, the rate is 14 cents per mile.

Does the Affordable Care Act affect 2013 tax returns?

For most people, no. But the Affordable Care Act includes two new taxes that affect mainly higher-income filers. The Additional Medicare Tax and the Net Investment Income Tax generally affect single filers with income higher than $200,000 and married couples filing jointly who have income higher than $250,000. The act also limits itemized deductions for medical and dental expenses. You can deduct only the part of those expenses that is more than 10 percent of your adjusted gross income (remains at 7.5 percent if either you or your spouse is age 65 or older).

If you don’t have a tax-filing requirement, you don’t need to file a 2013 federal tax return to establish future eligibility or qualify for future financial assistance, including advance payments of the premium tax credit to purchase health insurance coverage through a Health Insurance Marketplace. Learn more at HealthCare.gov.

Some employers are required to report on your W-2 form the value of the health insurance coverage they provide for you. The value of health care coverage reported by your employer is not taxable. For more information, visit www.IRS.gov/aca.

Adjust your withholding now

Some people like getting a big tax refund, but if you wind up writing a sizable check to the IRS this year or if your tax refund is bigger than you’d like, you need to adjust your withholding rate now. The Withholding Calculator at IRS.gov can help you calculate how much to have withheld.

Scam warning

Don’t be a scam victim! The IRS is warning about phone calls from scammers claiming to be with the IRS who demand payment using a prepaid debit card or wire transfer. The IRS will never ask for that method of payment and will not ask for credit card numbers over the phone. And even though the IRS is active online (including Twitter, YouTube, Tumblr and Facebook), remember that the agency will not initiate contact with you about your taxes using email or social media. Visit IRS.gov to learn how to report tax scams or fraud.

How to contact the IRS

Get help this tax-filing season online and avoid waiting in line. The IRS website, www.irs.gov, has a wealth of free information, online tax tools and free services.

Though most people now prepare and file their returns electronically, you can still get tax forms and publications at IRS.gov or by calling 1-800-TAX-FORM. Forms are also available at IRS taxpayer assistance centers and at some libraries and post offices.

For your mobile device, download the free IRS2Go app to check your refund status, order tax transcripts, get tax information and more.

You can call the IRS toll-free at 1-800-829-1040 (1-800-829-4059 for TTY/TDD). For business-tax questions, call the IRS at 1-800-829-4933.

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