Every year, legislators make changes to the tax law. This year saw some especially big changes, however, due to the American Taxpayers Relief Act, the Affordable Care Act and the decision of the Supreme Court to recognize same-sex marriage at the federal level. Married same-sex couples can now file jointly rather than as two separate individuals.
Another big change to the tax law involves the child tax credit. It is now permanent. Depending on your income and marital status, the child tax credit can be as much as $1,000 for every child age 17 or under. The refundable portion of the $1,000 will be ending in 2017, however. This means that if you were supposed to receive $500 for the tax liability for one child, you will no longer receive the remaining $500 as part of your refund in 2017.
Home improvements that save on energy will no longer provide tax credit after 2013. This means that it’s important to finish installing things such as double-paned windows or insulation before the end of the year if at all possible. Be sure to hold onto any manufacturer’s documents that indicate the product will give you a tax credit so you have something to show tax agencies if you’re audited.
Other tax credits that are now considered to be permanent include education assistance provided by an employer, the interest deduction on student loans and the credit for dependent care.
The maximum tax-free contribution that a person older than 70 1/2 can make from an IRA to a nonprofit is $100,000. These types of charitable deductions can only be taken if they are itemized. You must clearly indicate to the Internal Revenue Service how much of an IRA you take in distributions and how much is donated to charity.
Because tax laws are changing so often, it can become difficult to stay abreast of all the possible deductions you can take advantage of. It’s also possible to be unaware that a tax law change has caused you to owe more money. It’s best to let a professional handle your taxes if there’s any confusion or cause for concern.
foxbusiness.com, “10 Tax Law Changes You Need to Know About” Bonnie Lee, Nov. 29, 2013