Ready or not, tax season is here. Starting Friday, January 31st you can start filing your taxes.
This year, there are many changes, new taxes, and credits that were renewed you’ll want to make note of before you file.
When it comes to deducting medical expenses in 2013, the threshold went up. Instead of 7%, the threshold is now 10% of your income if you're under 65. Tax expert David Kembel explains. "Basically if you're retired the thought process is 7.5 is okay. If you're younger, medical expenses will have to be huge before you can deduct."
Also, there's a brand new Medicare tax. For wages more than $125,000, the Medicare tax is now .9%.
In years past your Flexible Spending Account was $5,000 but this year it dropped to $2,500. "That's something that every day middle income, low income, high income people could use and I hate for something like that to be taken away," said Kembel. A flexible spending account is typically used for prescriptions, co-pays, x-rays, and anything insurance does not cover.
As for higher income taxpayers, the top tax rate went back to 39.6% instead of 36. So, if you make more than $400,000 a year, this will affect you.
David Kembel is also amending several returns for same sex marriage couples. If you were married in a state that allows same sex marriage, you can file as married on your federal return but you will have to file single on your Virginia state taxes.
When it comes to credits, if you installed things like new doors, windows, or insulation you could qualify for the Residential Energy Credit.
If you're helping your child pay for college, you could qualify for a $2,500 credit. "It is a credit specifically for the first four years of college. So, if your kid is a freshman, sophomore, junior or senior, as long as you're spending four-thousand dollars in college tuition you qualify," explained Kembel.
Teachers were also granted the $250 credit for school supplies.
The last day to file your taxes is April 15, 2014.