Is the Tax Code Becoming More Complicated for 2013 Taxes? You Bet.
Because the U.S. tax code is nearly 4 million words in length already, it’s hard to imagine how it could get more complicated. But that’s what happened for 2013’s taxes: The government continued its trend of tweaking rules, changing procedures, and generally complicating how taxes work. Some taxpayers may find the changes wrought by the new complications helpful, while others will find them harmful; most likely, you’ll find them to be a mix of the two.
Higher-Income Tax Changes
According to the Washington Post’s Carole Feldman, several changes took place in 2013 that affect high-income earners. For instance, some might “pay higher capital gains taxes—20 percent for some taxpayers,” Feldman wrote. A new Medicare tax of 0.9% and an investment-income tax of 3.8% begin at earnings of $250,000 (for married couples filing jointly) and $200,000 (for other payers). Additionally, a top marginal rate of 39.6 began affecting taxpayers. It kicks in at $400,000, $425,000, and $450,000 for single filers, heads of household, and married couples filing jointly, respectively.
Same Sex Marriages
Same-sex married couples in 2013 gained greater recognition from a tax standpoint, but that doesn’t mean they suddenly have a simple path to filing taxes. Feldman reported that same-sex couples from 2013 might face the marriage penalty (where combined incomes lead to higher tax brackets and deduction phaseouts). Additionally, while the federal tax code now generally recognizes same-sex married couples, many state tax systems might not, sometimes necessitating extra filing. Same-sex married couples do, however, now benefit from some estate-tax protection.
Keep in mind that to file federal taxes jointly, same-sex couples must have originally been married in a state that recognizes same-sex marriages.
Home Office Deduction Changes
In one example of a rule change potentially making things easier, taxpayers can now calculate the home office deduction in a simpler fashion, if they so choose. Rather than keeping track of itemized expenses, home-office owners have the option deduct $5 per square foot of their home office. Yes, it adds some length to the tax code, but this is one area where a change will help some taxpayers. Of course, the fairly rigorous standards for what qualifies as a home office remain.
Health Care Tax Changes
Aside from taxes specifically targeted at high-income earners, the Affordable Care Act (ACA) also introduced in 2013 many other taxes and regulations. Employers now face new reporting rules. And an excise tax of 2.3% now applies to medical-device sales. Think that last one one sounds kind of simple? The excise tax alone required a separate 10-page notice for clarity and guidance.
Additionally, per the IRS’s page on ACA taxes, 2013 saw the start of a “limitation on deduction for compensation paid by certain health insurance providers.” Since that sounds kind of muddy, in April 2013 the IRS and Treasury “helpfully” proposed another 29 pages of regulations to clear things up. For 2013 tax complications, the ACA is truly the champion.
The U.S. tax code is roughly 8,000 times longer than this article, so there are likely countless other rule mutations to consider for 2013 taxes and beyond. Some will probably be aggravating, but with enough research and the help from an R&G Brenner professional, you may find a few new changes that are to your advantage.