Tax season 2014: Changes you need to know
What is different for your taxes this year? Here are a few items you need to know about in this tax season.
First, we'll look at the things that could pull a little bit more money from your wallet.
If you are at the top of the income bracket, you are going to pay more. While the Bush-era tax cuts were extended for most, the top tax brackets returned to 39.6 percent. So if you made more than $400,000 as an individual, or $450,000 as a couple, your tax bill will be higher this year. Additionally, if you are making over $200,000, you will be subject to a Medicare surcharge of 0.9 percent.
Secondly, deductions for medical expenses incurred in 2013 will be harder to get. Previously, you could deduct medical expenses if they exceeded 7.5 percent of your adjusted gross income. That number rose to 10 percent for 2013. So, if you or a family member were in the hospital last year, you will have a harder time writing those costs off.
Now for the good news: Education expenses once again provide an opportunity for a little relief. If you are a parent or student paying for school, the American Opportunity Credit could help you take up to $2,500 off of your tax bill if you paid tuition or fees last year, plus additional deductions for loan interest and other education-related expenses.
If you're a teacher, you can write off up to $250 in out-of-pocket expenses for books and other school supplies. A recent survey showed that on average, teachers spend nearly $500 of their own money on school supplies. If you are a teacher, the extension of this deduction is welcome news.
Finally, if you made energy efficient improvements to your home -- whether it was installing an energy-saving heater or upgrading to more efficient windows, you can qualify for an energy credit of 10 percent of the cost of those changes -- though the lifetime maximum is $500. The deductions vary by improvement, so be careful, but it's definitely something to keep in mind.
Check out the IRS' Tax Guide for more tips and changes.
With additional reporting by Colin Buerger
