Tax Season Postponed: Use Time to Review 2 Changes
The Internal Revenue Service recently announced a slight delay for the 2014 tax season. As a result of the government shutdown in October 2013, the IRS anticipates a 1-2-week delay for filers in January 2014. The postponed tax season should allow necessary time for new tax processing systems to be tested and operable for taxpayers. Early filers can use the additional time to review two tax changes in 2013 that may impact returns for taxpayers in North Carolina and elsewhere:
1. Home office tax deductions.
A new simplified option for determining home office deductions
went into effect January 1, 2013. In addition to the actual-expense method, the new simplified option (called the ‘safe-harbor method’) offers a basic calculation using the square footage of home (maximum of 300 square feet) used for business purposes multiplied by $5. The $5 rate will not adjust with inflation, but it may fluctuate in the years ahead. When reviewing these options with a tax attorney, learn about the restrictions involved with the safe-harbor method.
2. Same-sex marriage tax savings. For the first time ever, partners in same-sex marriages (legally married in a state or country that allows such marriages) in North Carolina will be legally recognized for federal tax purposes. Not only will spouses be able to claim eligible income, gift, or estate tax benefits in the 2013 tax year, but they can file amended tax returns as far back as 2010 to collect applicable refunds.
Additional tax considerations should be addressed by individuals who modified trusts, received early distributions from retirement accounts, or who have made or received gifts in 2013. Keep an eye out for North Carolina tax changes in 2014. Pending legislation, such as Senate Bill 667 that may affect North Carolina income tax eligibility for parents with college students, may pass into law.