Category Archives: 2014 Tax Changes

Business Health Plan Review and Options


Businesses need to do a review of their health plan options and strategy.  Businesses with 100+ “full time employees” need to act this year; your mandate starts in 2015. Smaller businesses (50-99) have a little more time.  Your mandate begins in 2016.  See all of our posts on the effects of the Affordable Care Act.  

IRS Encourages Small Employers to Check Out Small Business Health Care Tax Credit; Helpful Resources, Tax Tips Available on
IR-2014-27, March 10, 2014 — With business tax-filing deadlines fast approaching, the IRS encouraged small employers that provide health insurance coverage to their employees to check out the small business health care tax credit and claim it if they qualify.






Tax Law Snapshot for the 2014 Filing Season

Overview of key tax law provisions that may affect your 2013 tax return. 

As we anticipate the economy to recover, you will want your business ready for growth. The American Taxpayer Relief Act of 2012 (ATRA) has new additions and changes that can benefit your business.  Not surprising, most small business owners, entrepreneurs (one-person shops) who should take full advantage of the tax law benefits and changes, do not have the time to fully read and digest the latest and greatest information out there.  Continue reading

Tax Reform Update for Small Businesses

How the Tax Reform Act of 2014 Will Affect Your Small Business

You may be holding your breath and wondering how tax reform will affect your small business.

The bill includes a renewal of Section 179 expensing. This tax advantage has typically been renewed every year with higher and higher thresholds, but on Jan. 1, the law reverted back to its original provision, which only allows $25,000 in the expensing of any new assets.

Purchases in excess of this amount must be depreciated over their useful lives. From 2010 to 2013, businesses were allowed a $500,000 threshold for Section 179 expensing. Proposed in the Tax Reform Act of 2014 will be a ceiling of $250,000 – levels enjoyed during 2008 and 2009.

The proposal does not allow for the renewal of bonus depreciation which also expired at the end of 2013. This allowed businesses to deduct 50% of the cost of all assets, above and beyond the Section 179 expensing.

In a statement, National Taxpayers Union Executive Vice President Pete Sepp said that the proposed reform aims to harmonize the top tax rate for S and C Corporations with qualified domestic income to 25%. He contends that because S Corporations are pass-through entities – the individual pays the tax on profit rather than the corporation – there will be an exclusion allowed to create an equivalent 25% tax. Qualified domestic income relates specifically to the manufacturing sector.

This change should encourage production and new jobs within our borders. “The proposal rightly aims to bring a measure of tax parity between ‘pass-through’ small business entities and traditional corporations, but how it hits that target must be thoroughly examined to ensure that job creators aren’t punished in the process,” Sepp said in a statement.

He also reiterated swift action on Capitol Hill will also be necessary. “Some tax-saving provisions for businesses will be gone several years before the final, beneficial 25% tax rate kicks in. Washington must avoid the appearance of clawing back many provisions in the short-term while pushing rate relief into the long-term.”

One tax element that hits many small business owners is the Alternative Minimum Tax which can be triggered when using net operating losses against current year income and when taking depreciation and Section 179 expensing.

On the other hand, the National Federation of Independent Business (NFIB) Vice President of Federal Public Policy Brad Close made the following statement in response to Camp’s proposed reform:

“NFIB has long advocated tax reform that achieves lower rates and a simpler code,” said Close. “While we appreciate Chairman Camp pursuing tax reform that lowers some rates, we are very concerned that this plan does not address the core issues that are important to all small businesses: simplifying the code, leveling the playing field for all businesses, and addressing both corporate and individual tax rates.  We look forward to working with members of the Ways & Means Committee and Chairman Camp to achieve comprehensive tax reform that does not pick winners and losers based on size and type of business.”

The tax reform is nowhere near being carved in stone; after all, this is only the discussion draft, so we shall see.


International Business Times : Best & Worst States for Taxes

IBT LogoUnited States Of Taxation 2014: Here Are The Best And Worst States For Consumption Taxes, Total Tax Burden

Nothing is certain except death and taxes, but taxes can be far more complicated than death. The following article by Angelo Young of IBT makes it pretty clear for you.

As the April 15 tax filing deadline approaches, two groups have released data sets that can offer insight into which states are the most forgiving (or punishing) when it comes to consumption taxes and overall local tax burdens. Continue reading

401(k) and IRA Limitations and Adjustments for 2014

Larger IRSIRS cost‑of‑living adjustments affect dollar limitations for pension plans and other retirement-related items for tax year 2014. 

Some pension limitations such as those governing 401(k) plans and IRAs will remain unchanged because the increase in the Consumer Price Index did not meet the statutory thresholds for their adjustment.  However, other pension plan limitations will increase for 2014.  Highlights include the following: Continue reading

Want Affordable Care coverage beginning March 1? Plan now for best results.


Consumers are applying and enrolling in quality, affordable health coverage every day using and State-based Marketplaces around the country. More than 3 million have enrolled so far, and we hope millions more will do so by March 31, the end of open enrollment.

From Saturday February 15, 2014 at 3:00PM until Tuesday, February 18, 2014 at 5:00AM EST, the Social Security Administration will conduct required, regularly scheduled systems maintenance activities over the three day weekend. During this period, verification of Social Security Numbers and other related data via the Data Services Hub will be unavailable. All other services of the Hub will be functioning as normal.

What this means for you:

If you have already completed your application and know what you qualify for: This doesn’t affect you — you can continue shopping and pick a plan to finish your enrollment.

If you want coverage effective March 1, 2014: You generally need to sign up by February 15. But, because of the maintenance window, you won’t be able to find out what you qualify for if you apply after 3pm that day. If you aren’t able to complete your enrollment online by February 15, call us at 1-800-318-2596 starting on February 18 to request coverage beginning on March 1. We will work with you to get you covered.

If you want coverage with a later effective date: You can complete your application during this time but won’t be able to find out what you qualify for during the maintenance period. When you complete your application, you’ll need to save it and return to on or after February 18 to find out what you qualify for, pick a plan, and complete your enrollment.

Remember, you have until March 31 to sign up for new coverage during this year’s open enrollment period.

Nonprofit Organizations Conducting Campaign Activity


Back on December 31 our post on What You Need to Know about NFP 501(c)(4) organizations outlined the changes, including a new definition in 501(c)(4) social welfare organizations.

Beginning January 1, 2014 the Government Code relating to campaign activity was amended to add reporting requirements for “reporting nonprofit organizations” that engage in campaign activity.

Government Code Section 54964.6 was added to require reporting nonprofit organizations – that engage in political activity – of specific amounts to:

  • File FTB 3589 with CA FTB and post on the nonprofit’s Internet website the identity and amount of each specific source or sources of funds it receives for campaign activity. (As of this posting, Form FTB 3589 is not available, and will not be available until 2015.  You should contact your tax professional or the Franchise Tax Board.)
  • Deposit into a separate bank account all “specific source or sources of funds” it receives.
  • Pay for all campaign activity from that separate bank account.
  • Provide a description of the campaign activity.
  • Report the identity and amount of payments the organization makes from the required separate bank account.


Net Investment Income Tax (NIIT) EA UPDATE

IRS Affordable Care Act Tax Provision WebsiteUPDATE: Funding the Affordable Care Act through NIIT

Want to know why it is a good idea to have an Enrolled Agent (EA) as your professional tax preparer?  They are “America’s Tax Experts®!” An EA can explain, in easy-to-understand language, how the new tax code will affect you and your taxes today, and help you plan for the future, The IRS is the *enforcement arm* for the Affordable Care Act Tax collection, and the laws and reporting requirements are changing almost daily.  You want someone who is looking out for you and your best interest (no pun intended).  Continue reading

How Can You Avoid the New 3.8 % Obamacare Tax


Cropped Doctor Patient Pic copyWhatever the name, taxes can be painful and the new tax is known by a few: the Affordable Care Act tax, the Obamacare tax, the Net Investment Income Tax (NIIT), or Medicare Tax.  Most media (and even the President) is using the name “Obamacare Tax”, so we will use that name for this writing.  For a full Q&A on the new tax, please see our Q&A on NIIT aka Obamacare Tax.

This is a tax on UNEARNED INCOME.  Unearned income is defined as income derived from sources other than  employment, such as interest and dividends from investments, or from rental property (source: The types of income that will be affected by the new Obamacare tax are. Continue reading

Affordable Care Act Tax Provisions: Employer Provided Health Coverage in Form W-2

Reporting Employer Provided Health Coverage in Form W-2

Cropped Doctor Patient Pic copyThe Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan on an employee’s Form W-2, Wage and Tax Statement, in Box 12, using Code DD. Many employers are eligible for transition relief for tax-year 2012 and beyond, until the IRS issues final guidance for this reporting requirement.

The amount reported does not affect tax liability, as the value of the employer excludable contribution to health coverage continues to be excludable from an employee’s income, and it is not taxable. This reporting is for informational purposes only, to show employees the value of their health care benefits.

More information about the reporting can be found on Form W-2 Reporting of Employer-Sponsored Health Coverage.


Image Credit: ClipArt

Affordable Care Act Tax Provisions : Small Business Health Care Tax Credit

Financial PlanSmall Business Health Care Tax Credit

This credit helps small businesses and small tax-exempt organizations afford the cost of covering their employees and is specifically targeted for those with low- and moderate-income workers.

The credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have.

In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees. On Aug. 23, 2013, the Department of Treasury and the IRS issued proposed regulations which include information on the transition of eligibility for the credit and requiring the purchase of insurance coverage through an Exchange. Additionally, IRS Notice 2014-06 provides transition relief for employers in certain counties in Washington and Wisconsin with no SHOP coverage available. Learn more by browsing our page on the Small Business Health Care Tax Credit for Small Employers.


Related Links:




3 Tax Tips You Need to Know Heading Into 2014

Countdown to the New Year.

FoxNews irs-logo-tax-1040-formThe budget deal that Congress and President Obama struck at the beginning of the year to avoid the fiscal cliff resulted in seven tax increases. If you throw in the six tax hikes that are part of Obamacare,  that means there are 13 new taxes that may have hit you in 2013.

1.) The biggest potential taxes for wage earners include: Continue reading

Safe Harbor Rule Does Not Favor Child Care Providers

January 29 Header for ChildCare Site

Recently, the IRS updated this ruling, and we feel even stronger now that for the vast majority of our child care provider clients this rule is not in their favor and we will not be using it.   To read more, see original post  Safe Harbor Rule Does Not Favor Child Care Providers.


Interest Rates Remain the Same for the First Quarter of 2014

For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.

Larger IRS


IR-2013-96, Dec. 9, 2013

WASHINGTON ― The Internal Revenue Service today announced that interest rates will remain the same for the calendar quarter beginning Jan. 1, 2014.  The rates will be:

  • three (3) percent for overpayments [two (2) percent in the case of a corporation];
  • three (3) percent for underpayments;
  • five (5) percent for large corporate underpayments; and
  • one-half (0.5) percent for the portion of a corporate overpayment exceeding $10,000.

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis.  For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.

Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.

The interest rates announced today are computed from the federal short-term rate determined during Oct. 2013 to take effect Nov. 1, 2013, based on daily compounding.

Revenue Ruling 2013-25 announcing the quarterly rates will be published  in Internal Revenue Bulletin 2013-52, dated Dec. 23, 2013.

Troubled or Modified Loans?

If you had a loan modified, or lost a property in foreclosure or short sale in 2013, I will need to have all the details.  You can’t put behind you until we deal with the tax issues.

For instance, you might have income from cancellation of part of the mortgage.  Look for Forms 1099-A and/or 1099-C in the mail.  I must see these.

What I also need from you are all the details surrounding what happened.  I need the history of all the loans associated with the property.  It will help to see mortgage statements.  Many times these cases involve more than simply tax law, so please be as thorough as possible.

If you have any questions – don’t hesitate to call.  The number is 619-589-8680.

Pay-It-Forward Tax-Saving Moves for 2013!

What Tax Moves Can You Make In December?

Identify and pre-pay deductible expenditures

In our last “tax move” post, we suggested taxpayers look at all the options they have for lowering their tax bill due in 2014.  Here are some more possibilities:

January house payment - Prepaying your mortgage will give you 12 months of deductible interest.  The same for a vacation home. Continue reading