The tax filing season begins Friday, and taxpayers will see many changes to deductions and rates.
The first change is the date; the Internal Revenue Service changed the opening date from Jan. 21 to Jan. 31 to allow more preparation after the 16-day government shutdown in October.
Delaying the tax season opening this year gave the IRS time to program and test its tax-processing systems, said Acting Commissioner Danny Werfel.
"It's a complex process, and our bottom-line goal is to provide a smooth filing and refund process," he said in a statement.
Many tax preparers have already started accepting tax returns and are holding them until the IRS systems open Friday.
While consumers may notice many changes, they won't pose any significant challenges when filing, said John Lopes, H&R Block district manager for the York-Harrisburg area.
Changes for filers: "One of the big things people need to be aware of are changes around the Affordable Care Act," he said.
Though no penalties will be imposed this tax filing season, this is the year when taxpayers need to secure health insurance. If they don't — or fail to qualify for exemptions — next year they will face what the IRS calls a shared responsibility payment.
Uninsured taxpayers will have to pay either 1 percent of their taxable income, or a flat fee of $95 per adult and $47.50 per child up to $285 per family — whichever amount is largest.
"Tax preparers should be ready to walk people through these changes, and consumers need to understand it matters this year because the tax return will determine if they qualify for a (health insurance) subsidy next year," Lopes said.
Deductions: This year, deducting medical expenses will be harder. Expenses can only be deducted with 2013 filings if they exceed 10 percent of a taxpayer's adjusted gross income.
However, taxpayers 65 and older can still write off medical expenses at the previous 7.5 percent rate.
This is a big year for same-sex couples, who can now choose to file joint federal tax returns or married-separate returns. Even though Pennsylvania isn't one of the 17 states that legalized gay marriage, same-sex couples here can still file the federal returns and amend joint tax returns back to 2010.
This is also the tax filing year in which high-income earners will pay a higher 39.6 percent tax rate. Income exceeding $400,000 for single filers, $425,000 for heads of household or $450,000 for married couples is subject to the higher tax rate.
Deductions: Education deductions were extended, allowing taxpayers to again utilize the American Opportunity Credit which yields up to $2,500 per student for tuition and fees, as well as deductions for other tuition expenses and loan interest.
Teachers will still be able to write off up to $250 in out-of-pocket expenses for school supplies.
Taxpayers may qualify for a 10 percent energy credit if they made environmentally friendly improvements in their homes, such as buying energy-efficient appliances or installing solar panels.
This filing season offers some good news for taxpayers who work from home. The deduction for a home office was simplified, changing the way those with a home office claim expenses.
Itemized expenses no longer have to be included. Taxpayers can opt for a standard deduction, which is $5 per square foot of a home used as an office, up to 300 square feet for a maximum deduction of $1,500.
"Taxpayers can claim the deduction if the space is used for business regularly and exclusively," Lopes said.
His biggest advice to taxpayers is to file early.
"The sooner you file, the sooner you can get your refund back," he said.
—Reach Candy Woodall at firstname.lastname@example.org.