More On Tax Planningfrom The Advisor's Professional Library
- IRAs: Eligibility The eligibility rules for contributing to traditional and Roth IRAs are complicated. Learn how to effectively use them in retirement plans.
- Annuities: Variable Annuities Annuities are hot. The tax rules vary with the circumstances. Advisors must be aware of these intricacies when discussing annuities with clients.
The Internal Revenue Service has good news for taxpayers: The opening day for the 2014 filing season is Jan. 31, 10 days later than it first planned and one day later than a year ago.
(Deductions for charitable donations and other purposes to be included on 2013 tax returns, however, must be made by Dec. 31.)
In the wake of IT issues with Affordable Health Care Act, the IRS says it wants to have “adequate time to program and test its tax processing systems.” The federal agency, which relies on more than 50 systems to process about 150 million tax returns each year, says that its testing schedule was pushed back this fall due to the 16-day federal government closure.
“Our teams have been working hard throughout the fall to prepare for the upcoming tax season,” IRS Acting Commissioner Danny Werfel said in a press release. “The late January opening gives us enough time to get things right with our programming, testing and systems validation. It’s a complex process, and our bottom-line goal is to provide a smooth filing and refund process for the nation’s taxpayers.”
As in prior years, the IRS is asking taxpayers to use e-file or Free File as the quickest way to receive refunds.
One document that’s full of details on tax-saving opportunities is Publication 17. The 292-page guide explains the American Opportunity Tax Credit for parents and college students, as well as the Child Tax Credit and Earned Income Tax Credit for low- and moderate-income workers.
Some of the tax changes for 2013 to keep in mind include:
- A 0.9% additional Medicare tax, which applies to Medicare wages and self-employment income of $125,000 and up for some individuals and couples;
- A net investment income tax, which is 3.8% of the smaller of your net investment income or the excess of your modified adjusted gross income over $125,000; and
- A bump in the maximum tax rate to 20% from 15% on net capital gain and qualified dividends for some taxpayers.
The IRS says some software firms should begin accepting tax returns in January. They will hold those returns until the IRS systems open on Jan. 31.