Dividends and capital gains: The tax rate on these two sources of income remains unchanged from 2012, which is 0.0% if the taxable income of a single person is less than $36,250 and for married taxpayers that level is set at $72,850. As one writer stated, “it is bonanza time.” If your taxable income is over those amounts, the rate is 15% as long as the taxable income does not exceed $400,000 for a single person or $450,000 for married filing a joint return.
Tax credits/deductions that continue to be available in 2013:
- Child Tax Credit
- American Opportunity Credit (Post-secondary tuition expense)
- Non-business Energy Credit (Significant Limitations)
- Solar and/or Geo-thermal installation – 30% of cost
- Educator’s Expenses deduction
- Mortgage Insurance Premium deduction
- State and local sales tax deduction available for taxpayers who have no real estate taxes to report
- Discharge of principal residence indebtedness – excludable from income
- Earned Income Credit. Think you might qualify? Individuals seeking to secure Earned Income Credit (EIC) know that each year more information is required of the IRS. Year 2013 continues that trend. More documentation will be required to support your claim for EIC funds.