United States Tax Changes for 2013
U.S. taxpayers living in Canada in a legal same-sex marriage must now generally use the married filing jointly or married filing separately filing status on their U.S. returns.
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.
See Form 8959 (pdf) and its instructions.
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.
See Form 8960 (draft pdf) and its instructions.
Change in Tax Rates
The highest tax rate is 39.6%. For more information, see the 2013 Tax Computation Worksheet or the 2013 Tax Rate Schedules near the end of Publication 17.
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. See Chapter 16 of Publication 17.
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). See Chapter 21 of Publication 17.
Personal Exemption Amount Increase 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.
See Chapter 3 of Publication 17.
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.
See Chapter 29 of Publication 17.
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. See Chapter 2 of Publication 17. If you meet certain requirements, you may be able to file amended returns to change your filing status for some earlier years. For details on filing amended returns, see Chapter 1 of Publication 17.
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. See Chapter 5 of Publication 17.
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. See Chapter 37 of Publication 17.
Ponzi-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. See Chapter 25 of Publication 17.
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.
Standard Mileage Rates
The 2013 rate for business use of your car is increased to 56½ cents a mile. See Chapter 26 of Publication 17. The 2013 rate for use of your car to get medical care is increased to 24 cents a mile. See Chapter 21 of Publication 17. The 2013 rate for use of your car to move is increased to 24 cents a mile. See Publication 521, Moving Expenses.