Posted on February 4th, 2014

Form 1040—U.S. Individual Income Tax Return—Filing Status

Same-sex couples. Same-sex spouses who legally married on or before Dec. 31, 2013 in a state that recognizes same-sex marriage must file as married filed jointly or married filing separately, even if they now live in a state that does not recognize same-sex marriage. For this purpose, “state” means any domestic or foreign jurisdiction having the legal authority to sanction marriages. Individuals who have entered into a registered domestic partnership, civil union, or other similar relationship that is not considered a marriage under state law are not considered married for federal tax purposes. So for federal tax purposes, these couples who have been legitimately married in a   state which recognizes same sex marriage can elect married filing joint status. This however may prove to have problems as the State return has to be reconciled to the federal. In the case of those states which do not recognize same sex marriage like Louisiana, Mississippi, Texas and Florida, this may prove to be a burden. 

Moving expenses. The 2013 standard mileage rate for moving expenses is 24¢ per mile.

IRA deduction. In general, an individual who isn’t an active participant in certain employer-sponsored retirement plans, and whose spouse isn’t an active participant, may make an annual deductible cash contribution to an IRA up to the lesser of: (1) a statutory dollar limit, or (2) 100% of the compensation that’s includible in his gross income for that year. For 2013, the statutory dollar limit is $5,500 (increased from $5,000, for 2012), plus an additional $1,000 for those age 50 or older. If the individual (or his spouse) is an active plan participant, the deduction phases out over a specified dollar range of modified AGI (MAGI). For 2013, a taxpayer may be able to take an IRA deduction if he was covered by a retirement plan and his 2013 MAGI is less than $69,000 ($115,000 if married filing jointly or qualifying widow(er)). If the taxpayer’s spouse was covered by a retirement plan, but the taxpayer was not, he may be able to take an IRA deduction if his 2013 MAGI is less than $188,000.

Itemized deductions or standard deduction. For 2013, the standard deduction is $6,100 for single filers and for married persons filing separately, $12,200 for joint filers and qualifying widow(er)s, and $8,950 for heads of household. A taxpayer whose adjusted gross income is more than $150,000 (married filing separately), $250,000 (single), $275,000 (head of household), or $300,000 (married filing jointly or qualifying widow(er)) may not be able to deduct all of the taxpayer’s itemized deductions.

The self-employment tax rate is 15.3%

3.8% surtax on unearned income. For tax years beginning after Dec. 31, 2012, individuals are subject to a surtax of 3.8% of the lesser of: (1) net investment income, or (2) the excess of modified adjusted gross income (MAGI) over an un-indexed threshold amount ($250,000 for joint filers or surviving spouses, $125,000 for a married individual filing a separate return, and $200,000 in any other case). Net investment income may include rental and royalty income, income from partnerships, S corporations and trusts, and income from other passive activities reported on a taxpayer’s Schedule E, as well as on interest income and dividend income.

Medical and dental expenses. New for 2013, a taxpayer can deduct only the part of his or her medical and dental expenses that exceeds 10% of the taxpayer’s AGI (7.5% if either the taxpayer or the taxpayer’s spouse is age 65 or older.

Unreimbursed employee expenses. The 2013 standard mileage rate for business travel is 56.5¢ per mile.