GREENSBORO, NC -- With 27 days and counting until the end of the year, you don't want to be surprised when you start doing your 2013 taxes.
Tax expert Kevin Robinson is giving 2WTK viewers his cheat sheet for this year. You'll find the 4-page document attached to this article.
Due to the government shutdown, your taxes are still due by April 15, 2014, but the IRS won't start accepting and processing returns until Januay 28th or as late as February 4th. You can expect refunds will be delayed as well.
During the 2WTK newscast, Robinson hit four main topics:
Increase in un-reimbursed medical expense threshold from 7.5% Adjusted Gross Income(AGI)to 10% for taxpayers under age 65. (this is new for 2013)
For many years, taxpayers have added up their qualified medical expenses each tax season in hopes that it exceeded 7.5% of their AGI. In 2013 for taxpayers under age 65, a higher income threshold of 10% is in place which can make it harder to deduct their medical expenses. For married couples, if one spouse is 65 already or turns 65 in 2013 or through 2016, they are given a reprieve of the 10% income threshold till January 1, 2017.
Expiring at the end of 2013 tax year: Severance Wage Deduction
Deduction on 2013 NC Return for Severance Wages received by employees who have lost their jobs (ex. Tyco Electronics) this year. Severance pay that qualifies for this deduction is limited to the pay included in the taxpayer's federal adjusted gross income up to a limit of $35K. It is entered in the Deductions from Federal Adjusted Gross Income section line # 43 Severance Wages of the NC Return (Form D-400)
Help For Those Who Declared Bankruptcy, Foreclosed Their Homes or Sold Their Homes In A Short Sale
Exclusion from Gross Income for discharges of qualified principal residence indebtedness. With the economic down turn we have gone through, not only have people lost their jobs, some, unfortunately, have lost their homes through foreclosure and declared Chapter 11 Bankruptcy. Others have experienced a short sale where their house sold for less than the mortgage due on it and the owners did not have the assets in place to pay the difference. The Mortgage Forgiveness and Debt Relief Act of 2007 was extended through 2013 allowing taxpayers to exclude from income up to $2 million (taxpayers filing jointly, $1 million for taxpayers filing separately) of the forgiven debt on their principal residence. This is handled on line # 21 Other Income of Form 1040. The tax software should have a drill down menu allowing the taxpayer or tax professional to enter the amounts from Form 1099-C and tie it to Form 982 (Reduction of Tax Attributes) where the reason for the debt forgiveness can be checked.
Did You Buy A Car, Camper Or Boat? Write Off The Sales Tax!
If the sales tax you paid is more than the amount you paid in state income tax last year, you can write off the extra sales tax. Line #5 of Schedule A allows taxpayers the option of claiming the higher of the two taxes. Taxes paid in will flow from the taxpayer's W-2 form(s) or Estimated Tax payments. Tax software will calculate the applicable sales tax deduction and take the higher of the two. For taxpayers who have purchased a large ticket item such as a car, truck,camper or boat in 2013, they also paid sales tax at the time of purchase. If the taxpayer's sales tax deduction on Schedule A is greater than their NC income tax paid, the sales tax paid on these items can be added On line #7 of Schedule A) to the sales tax deduction generated by the tax software.
EXTRA: New for 2014
NC Dept. of Revenue is requiring all employers to provide employees with Form NC4-EZ or NC-4 to be completed and filled out by the employee by the end of 2013 for the 2014 tax year. This also applied to retirees receiving a pension or annuity payment in 2014 as they will need to complete a new NC-4P form. If the employee does not return Form NC4 or NC4-EZ to their employer before January 1, 2014, the employer is required to withhold NC Income at the Single with no allowances rate which is the highest amount.