The Norman Transcript

Nation/World

January 22, 2014

Higher-income Americans hit hardest by tax changes

WASHINGTON — Higher-income Americans and some legally married same-sex couples are likely to feel the biggest hits from tax law changes when they file their federal returns in the next few months. Taxpayers also will have a harder time taking medical deductions.

In other changes for the 2013 tax year, the Alternative Minimum Tax has been patched to prevent more middle-income people from being drawn in, and there’s a simpler way to compute the home office deduction.

Tax rate tables and the standard deduction have been adjusted for inflation, as has the maximum contribution to retirement accounts, including 401(k) plans and Individual Retirement Accounts.

The provisions were set by Congress last January as part of legislation to avert the fiscal cliff of tax increases and spending cuts.

“We finally got some certainty for this year,” said Greg Rosica, a contributing author to Ernst & Young’s “EY Tax Guide 2014.”

Nevertheless, the filing season is being delayed because of the two-week government shutdown last October. The Internal Revenue Service says it needs the extra time to ensure that systems are in place and working. People will be able to start filing returns Jan. 31, a week and a half later than the original Jan. 21.

No change in the April 15 deadline, however. That’s set by law and will remain in place, the IRS says.

Higher-income taxpayers: The tax legislation passed at the start of 2013 permanently extended the Bush-era tax cuts for most people but also added a top marginal tax rate of 39.6 percent for those at higher incomes — $400,000 for single filers, $450,000 for married couples filing jointly and $425,000 for heads of household.

On top of that, higher-income taxpayers could see their itemized deductions and personal exemptions phased out and pay higher capital gains taxes — 20 percent for some taxpayers. And there are new taxes for them to help pay for health care reform.

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