Tax Deductions and Exemptions-  The tax law provides a standard deduction for those who don’t claim itemized deductions. For 2013 the standard deduction increases to $6,100 ($12,200 for married filing jointly), up from $5,950 ($11,900 for married couples) in 2012.

The personal exemption rose as well, to $3,900 in 2013, up from $3,800 in 2012.  There is a limitation on the itemized deductions and personal exemptions for taxpayers with incomes of $250,000 or more ($300,000 for married couples filing jointly).

The maximum Earned Income Tax Credit is also up: in 2013 a couple filing jointly with three or more children can nab a credit as high as $6,044, up from $5,891 in 2012.

Tax Rates-  As inflation drives wages up, the amount of wages taxed may be less. In tax year 2013, for each of the marginal tax rates - 10, 15, 25, 28, 33 and 35 percent – you will continue to see a reduction in the amount you’re taxed since income limits taxed at lower tax rates were increased.  In 2013 individuals were also given a tax break because Alternative Minimum Tax income limits increased allowing less taxpayers to be subject to this additional tax.  Income above $51,900 ($80,800, for married couples filing jointly) may be subject to the Alternative Minimum Tax, up from $50,600 ($78,750 for married couples filing jointly) in 2013.

There are some changes for high-income taxpayers in 2013. A new tax rate of 39.6 percent has been added for taxpayers whose income exceeds $400,000 ($450,000 if married filing jointly).

Gifts – Gifts you give over a certain amount must be disclosed to the IRS by filing a gift tax return. For years, gifts under $10,000 were exempt, and that’s the amount many people remember. But in actuality the exclusion amount has been going up for a number of years. In 2009 through 2012 it was $13,000, but beginning in 2013 you can gift anyone up to $14,000 a year without filing a gift tax return.

Retirement plans -  If you contribute to a 401(k) or other voluntary salary reduction plan such as a 403(b) or a TSA, in 2013 you’ll be able to contribute up to $17,500 to the plan, up from $17,000 in 2012. If you are 50 or older you can contribute an additional $5,500, for a total contribution of $23,000.

If you are self-employed and have a SEP IRA, for 2013 you can sock away 25% of your gross income, up to $51,000 of retirement contributions. That’s $1000 more than last year.

IRA contributions are also on the rise. You can contribute up to $5,500 a year to your IRA (that was $5,000 last year), plus an extra $1000 if you are at least 50. To contribute the full amount to a Roth IRA, your income  must be $188,000 or less if you are married filing jointly ($127,000 for singles), up from $183,000 in 2012.

Remembering these IRS inflation adjustments will help you plan throughout the year and save at tax time.

As is the case with anything tax-related, you’ll have to meet the requirements; and once those requirements are satisfied, you’ll be able to receive an additional tax break for your efforts that was designed to help offset the costs associated with caring for a parent.

Support Means Support

To meet the support requirements necessary to claim your parent as a dependent on your tax return, you must cover more than half of your parent’s support costs – meaning 51% or more of their support costs must be covered by you.

These costs include food, housing or lodging expenses, clothing, and medical services and/or equipment costs.

If support for your parent was given by a group of individuals or family members, you may want to sign a Multiple Support Declaration form which would allow a single person in the group to claim your parent as a dependent, thus giving the tax break to a single person.

Residency and Relationship

The technical term that the IRS uses to meet the relationship requirement for these tax and life situations is “Qualifying Relative”. This means that the person you’re caring for can be your parent, an in-law, or even a grandparent.

However, they must be related to you biologically, by adoption, or through marriage (which would technically be a biological relationship through your spouse).

And guess what?  The IRS has residency requirements as well. To meet the resident requirement, the person you are caring for must meet one of the following:

• Be a legal US Citizen
• Be a US National
• Be a US Resident Alien
• Be a Resident of Canada or Mexico

For foreign, non-US-citizen parents to achieve official US resident status, they must be a recipient of a Green Card issued by the US government or have lived in the US for 183 days during the past tax year.

Social Security and Gross Income

The parent you want to claim as a dependent on your tax return must have a social security number or a tax identification number. Either of these numbers will satisfy the identification requirement for the IRS.

To be allowed to claim your parent as a dependent, your parent’s earned income cannot be more than$3,800 for the 2012 tax year. This means that if your parent earns more than $3,800, you aren’t eligible to claim them as a dependent. Non-taxable income, such as Social Security, does not count toward this amount.

Also, the parent you’re claiming as a dependent cannot file a joint tax return.

More Perks and Requirements

One of the last requirements that needs to be stated is that, if you want to claim your parent as a dependent on your tax return, you yourself cannot be eligible as a dependent on someone else’s tax return. Again, you cannot be claimed as a dependent or eligible as a dependent (even without being claimed) if you plan to claim your parent as a dependent.

Once all of the requirements are met, you’ll be happy to receive an additional $3,800 tax exemption on your return.

You are also allowed to include your parent’s medical expenses when calculating your medical deductions, and you may also be able to claim the Dependent Care Credit if your parent needs assistance while you’re at work or away.

When you answer a few simple questions, TurboTax will figure out whether you are eligible to claim a relative as a dependent.  If you still have questions, you can talk to a TurboTax tax expert while you prepare your tax return.

Still have questions?  TurboTax walks you through the appropriate questions to help you get the dependent tax deductions you are eligible for.

We don’t commonly associate the Olympics with taxes, but this year, the two will at last collide. In order to secure the 2012 games, London was required to award special tax exemptions to some of the personnel. But why were these exemptions necessary – and what do they cover? Moreover, why are British taxpayers reportedly on the hook for over $2 million in stadium upgrades after the games are over?

We examine these Olympic tax issues in greater detail below:

Who Is Exempt?

Source

Despite assumptions to the contrary, the tax exemptions reportedly will apply only to “a small number of non-residents who are directly involved in the delivery of the games”, according to HM Revenue & Customs. HM adds that “for most people working or supplying to London 2012, there will be no specific tax exemptions in place, and normal tax laws apply.”

It appears, according to the BBC, that these exemptions – which officially took effect on January 1, 2011 – were necessary in order to secure the participation of key foreign professionals, including:

• Competitors
• Journalists
• Representatives of foreign governments, official Olympic bodies like the International Olympic Committee, and host cities for future games
• Equipment technicians
• Team officials
• Referees and judges

Similar exemptions have reportedly been extended to “officially designated Olympic partners who provide a commercial service to the game.” Additionally, performers at the opening and closing ceremonies will not be taxed on performance or rehearsal payments, and the London Organising Committee (largely responsible for putting the event together) will not pay any corporate taxes in connection with the Olympics.

The Rules to Qualify

Source

In addition to being members of the above parties, those seeking the Olympic tax exemptions must meet the following criteria:

• Must be “neither resident nor ordinarily resident” in the UK during the 2012-13 financial year.
• Can only exempt income that is “wholly and exclusively” earned from taking part in the Olympic games
• Can only exempt income earned between March 30, 2012 and November 2012

The only exception to the March-November time frame is for staff working as employees/contractors for Olympic broadcasters, who will receive a longer exemption period (April 6, 2011 to April 5, 2013.)

Stadium Upgrades

Source

There is another tax aspect of the 2012 Olympics: taxpayer-funded upgrades to London’s Olympic Stadium. Started in 2007 and finished in 2011, the stadium will apparently require over £2 million in repairs after the games conclude to make the pitch usable for Premiere League football (soccer) games. For unknown reasons, the field (built with the Olympics in mind) currently installed was not designed to Premiere League standards, which mandate under soil heating technology for regulation football games.

Without publicly funded upgrades to remedy the situation, the DailyMail explains, neither West Ham nor any other public club will be able to play at the £486 million stadium.

The repairs would have fallen on West Ham if its long-term tenancy agreement was not cancelled amidst legal problems. Now, the burden falls squarely on the Olympic Park Legacy Company to transform the stadium – and to make matters worse (from a public standpoint) the team could simply end up renting the stadium anyway.

W-4 Form

There’s some good news if you’re employed and have taxes taken out of your paycheck automatically. When your income changes in this situation, the taxes taken out will change accordingly. But that doesn’t mean you don’t have anything to worry about. You may still be in a situation where you’re having too much or too little withheld, so now is a good time to check your W-4.

You file form W-4 with your employer and this tells them how many exemptions you want to claim so they can calculate how much should be withheld from your paycheck and sent to the IRS. What you enter on this form will largely determine how much of a refund or how much you owe each April, and most people tend to have more money than necessary withheld, resulting in a tax refund.

You can use the TurboTax W-4 salary calculator.  It will only take a few minutes of your time and it will help you come up with the appropriate number of exemptions so that you can maximize your paycheck without letting the IRS hold on to more of your money throughout the year. While there’s nothing wrong with getting a refund every year, it’s still a good idea to put more money into your pocket every month, which can then be immediately applied to one of your many financial goals without needing to wait for that one refund check each year.

For the Self-Employed

If you’re self-employed and expecting a change in income, you’ve got a little more work to do. Since your taxes probably aren’t automatically withheld from a paycheck, you’re likely relying on paying quarterly estimated taxes. When your income changes, so too does the amount of money you need to send in each quarter. In the event your income goes up and your estimated payments don’t increase to reflect that, it’s possible you could be hit with an underpayment penalty.

While it isn’t an exact science, figuring out how to adjust your quarterly tax payments doesn’t have to be complicated. The easiest thing to do is to simply adjust the tax payments by the same percentage as the change in income. For example, if you’re expecting a 20 percent increase in income, increase your quarterly tax payment by an additional 20 percent. You also need to consider your other tax deductions and credits, but TaxCaster can easily help you estimate if you are taking out enough taxes.

There are obviously many other business items and expenses that can change how much tax is to be paid, but if at first you simply increase or decrease your tax payments in-step with the change in income you’ll be in the ballpark. Once you file your taxes at the end of the year you’ll then have a better idea of what those tax payments need to be going forward and you can fine tune it for the next tax year.

Today, we’ll introduce you to the topic with our beginner’s guide on duty-free shopping.

What Is It?

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Duty-free shopping enables citizens of one country to buy goods in another and bring those goods back home without paying duty (or tax) on some or all of the purchase price. How much duty you avoid is known as your personal exemption, which depends on factors including:

• Where you bought the item in question
• Whether the item contains tobacco or alcohol

Where Are The Duty-Free Shops?

Note however that not all duty-free shops reside in these locations. Others are located in shopping malls, along beaches, and at popular tourist areas. It all depends on the country you are visiting.

Important Rules

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It’s easy to get so caught up in the savings potential of duty-free shopping that you neglect important rules. It’s critical to know what is and isn’t permissible, because failure to follow the rules can lead to steep surcharges. Perhaps the most important restriction is this one, explained by DutyFree.com:

If you’re a U.S. citizen returning home after staying at least 48 hours in a foreign land, you typically may bring $800 of duty-free merchandise into the country. If you exceed that limit, you’ll pay a 3% surcharge on the next $1,000 worth of purchases. Those with over $1,800 of merchandise must pay a tax of up to 25% on the amount that exceeds this limit.

Other key rules include:

• Americans visiting a foreign country for LESS than 48 hours typically only get a $200 exemption
• Family members can combine exemptions (example: a family of three could bring $2,400 worth of goods home, duty-free)
• Children do not get tobacco or alcohol exemptions. Thus, these items must be taken home by adult family members
• Tobacco and alcohol are treated differently than other goods. One liter of alcohol and one carton of cigarettes are the typical limits for duty-free importation

Best Duty-Free Zones

(source)

Like traditional malls and stores, some duty-free shops are better than others. The last thing you want to do is travel somewhere far away (in search of huge savings) only to find lackluster or non-existent deals when you get there. Luckily, various publications have put together lists of the best duty-free shopping zones in the world.

Take this one from Esquire, for instance. Whether you are looking for Lacoste shirts, Chanel No. 5, or Neuhaus Chocolate, guides like these direct you straight to the best deals and biggest savings (so you can avoid chasing fruitless sales.)

When Is It Worthwhile?

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Experts are divided on whether duty-free shopping is actually worthwhile from a dollars-and-cents standpoint. A recent USA Today article on the subject, for instance, stated:

“Duty-free is almost never a deal for the casual shopper out to get a bargain,” says Jason Clampet, a senior editor for travel guidebook publisher Frommers.com. “You can save significant amounts if you’re a smoker who lives in a state with high taxes, but you’ll find that electronic goods, beauty products and luxury items such as designer purses usually cost less at home or online.”

The article went on to say that duty-free shops in the U.S. are almost never worth visiting for a U.S. citizen. Rather, Americans in search of big-time savings are advised to head abroad. Liquors and wines, in particular, are recommended for pickup in their countries of origin. Meanwhile, Americans are advised to buy electronics, watches, and handbags at home (due to both the cost and the high likelihood of being sold a fake.)

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For 2009, the personal income tax exemption amount is $3,650. That’s per person, not per family. That amount applies so long as your adjusted gross income (AGI) falls under the phaseout amount. Phaseouts begin at $125,100 for taxpayers filing as married filing separately, $166,800 for taxpayers filing as single, $208,500 for taxpayers filing as head of household and $250,200 for taxpayers filing as married, filing jointly.

You are generally allowed one exemption for yourself if you cannot be claimed as a dependent on any other taxpayer’s return — whether or not the other taxpayer chooses to claim you.

If you are married filing a joint income tax return, you can claim one exemption for your spouse, even though a spouse is not considered your dependent. If you are married filing a separate tax return or as head of household, you can claim an exemption for your spouse if your spouse had no gross income, is not filing a tax return and cannot be considered the dependent of another taxpayer.

You can take one exemption for each person you can claim as a dependent, even if your dependent files his or her own tax return. A dependent is either a qualifying child or a qualifying relative.

There are six tests that must be met for a child to be your qualifying child:

1. The child must be your son, daughter, stepchild, foster child, brother, sister, half-sibling, step-sibling or a descendant of any of them. Your legally adopted child is considered your child.

2. Your child must be under age 19 at the end of the year and younger than you or a full-time student under age 24 at the end of the year and younger than you. Your permanently and totally disabled child always qualifies, regardless of age.

3. Your child must have lived with you for more than half of the year. Exceptions apply for temporary absences such as illness and travel, children who were born or died during the year, kidnapped children and children of divorced or separated parents.

4. Your child cannot have provided more than half of his or her own support for the year. Support includes basic needs such as room and board.

5. Your child cannot file a joint tax return with any other person for the year.

6. If two taxpayers believe the child qualifies as a personal exemption under the other five tests, special tie-breaker rules apply:

• If only one of the taxpayers is the child’s parent, the child is treated as the qualifying child of the parent.
• If both parents claim the child, but file separately, the IRS looks to see which parent lived with the child the longest during the tax year. If the child lived with each parent for the same amount of time, the IRS will treat the child as the qualifying child of the parent who had the higher AGI for the year.
• If no parent is able to claim the child, the child is treated as the qualifying child of the taxpayer with the highest AGI for the year.
• If no parent claims the child even though they were able to, the child is treated as the qualifying child of the taxpayer with the highest AGI if that taxpayer’s AGI is higher than that of any of the parents who could have claimed the child.
• If all else fails, the taxpayers may be able to agree between the two of them who may claim the child.

The tests that must be met for a person to be your qualifying relative are a bit different. They are:

1. The cleverly named “not a qualifying child test.” It’s just like it says on the tin: A child is not your qualifying relative if he or she is the qualifying child of any taxpayer.

2. The relative must either live with you all year as a member of your household or be related to you in one of a number of ways; the usual suspects qualify, such as your immediate family, but the test also extends to half siblings, step siblings and in-laws.

3. The relative must not have gross income for the year of $3,650 or more.

4. You must have provided more than half of your relative’s total support during the year.

Divorce and custody agreements may affect whether you may claim a child or relative as a dependent. Make sure that you understand what those agreements say that before you sign one; it’s difficult to change later. You should know that the IRS doesn’t want to be an active participant in any arguments about dependents, so be sure to work these details out beforehand, if possible.

To actually claim a dependent as a personal exemption on your tax return, you’ll need to provide the person’s name, Social Security number and relationship. If you’re using tax preparation software or a tax professional to prepare your return, you may need to provide the birth dates of your dependents.

A family of five could qualify for up to $18,250 in personal exemptions — that doesn’t even include related deductions and credits. Be sure you understand the rules for claiming personal exemptions and don’t pay more in taxes than you have to.

This post was originally posted as part of a series on Tax Basics for AOL’s WalletPop. You can read more from WalletPop’s tax expert, Kelly Phillips Erb, here.