Sunday, March 24, 2013

IRS Simplifies Home-Office Deduction

IRS Simplifies Home-Office Deduction

The IRS is reducing the recordkeeping required for the home-office deduction, effective for 2013. Taxpayers who qualify may use a new optional deduction calculated at $5 a square foot for up to 300 square feet of an area in a home that is used regularly and exclusively for business. The deduction is capped at $1,500 a year.
Taxpayers opting for the simplified deduction cannot depreciate a portion of the home as they can under the other method. However, business expenses not related to the home, such as advertising, supplies, and employee wages are still fully deductible. This simplified option is available starting with the 2013 tax return which will be filed in 2014.
Extended provisions in the American Taxpayer Relief Act of 2012
The Act extended familiar itemized deductions, including state and local sales tax and the premiums you pay for mortgage insurance on your home.
Above-the-line deductions, such as the qualified tuition deduction for higher education expenses and the $250 deduction for unreimbursed expenses if you’re a teacher, are also available for both 2012 and 2013.
Another tax break that was renewed: the ability to contribute up to $100,000 from your traditional IRA to a qualified charity. As before, when you’re age 70½ or older, you can make a distribution directly from your IRA to the charity. The amount you donate is not included in gross income, and you can consider it part of your required minimum distribution for the year.
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Friday, March 8, 2013

Tax Numbers for 2013 and 2012 – Part 2

Tax Numbers for 2013 and 2012 – Part 2
The numbers for 2012 in the chart below apply to your 2012 returns, and the numbers for 2013 should be used in your 2013 tax planning.
                                                                                           2013                               2012
Income (AGI) phase-out for personal
exemption and itemized deductions
* Single                                                          Starts at $250,000             No income limit
* Joint returns and surviving spouses             Starts at $300,000             No income limit
* Married filing separately                              Starts at $150,000             No income limit
* Head of household                                      Starts at $275,000             No income limit
Health savings account contribution limit
* Individual                                                                      $3,250                            $3,100
* Family                                                                           $6,450                            $6,250
* Additional for 55 & older                                             $1,000                            $1,000
Automobile standard mileage rate
* Business                                                                          56.5¢                              55.5¢
* Medical/moving expense                                                   24¢                                 23¢
* Charitable work                                                                 14¢                                 14¢
Estate tax top rate                                                               40%                                35%
Estate tax exclusion                                                  $5,250,000                     $5,120,000
Annual gift tax exclusion (per donee)                            $14,000                          $13,000
Alternative minimum tax exemption
* Single                                                                          $51,900                          $50,600
* Married, joint                                                              $80,800                          $78,750
* Married, separate                                                        $40,400                          $39,375
Section 179 deduction limit                                      $   500,000                     $   500,000
Section 179 purchase limit                                       $2,000,000                     $2,000,000
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