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8 Tax Changes That Could Affect You

Taxes

By year's end, Americans usually have a good idea of what the tax rules will look like in the new year and can plan accordingly. That's not the case this time around. With a huge chunk of the tax code set to expire Jan. 1, the 2013 tax forecast is, well, foggy.

With a bumper crop of tax code changes, extensions and expirations, filing your return may be tricky. Here's what you need to know.

  1. The health insurance penalty If you didn't have health insurance in 2015 you will pay $325 per person or 2% of your household income, whichever is greater.
  2. Pell grants Pell grants may be allocated as living expenses, potentially increasing the education credit
  3. Deductions are increasing The standard deduction goes up to $6,300 for singles and $12.600 for married filing jointly
  4. The Alternative Minimum Tax Is Increasing The Alternative Minimum Tax exemption amount is now $53,600 for individuals and $83,400 for joint filers.
  5. Higher Limits on 401(k) deductions The limit on employee contributions to a 401(k) plan will increase by $500 and is now $18,000. The "catch-up" allowance for those over 50 is also up $500 to $6,000.
  6. Many expired tax breaks were extended These include the higher education tuition deduction, energy credits, and commuter tax breaks, among others.
  7. Government payments for health care to relatives If you are paid by the government to provide non-skilled medical support services to a relative in your home, this can be excluded from taxable income.
  8. Tax brackets are adjusted for inflation The lowest bracket will go from $18,150 to $18,450, all other brackets are being adjusted too.

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Personal Finances

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