Category Archives: 2014 Tax Changes

For Most Truckers, Highway Use Tax Return Due Sept. 2

 BREAKER, BREAKER :  Issue Number:    IR-2014-82

Larger IRS

 

WASHINGTON — The Internal Revenue Service today reminded truckers and other owners of heavy highway vehicles that in most cases, their next federal highway use tax return is due on Tuesday, Sept. 2, 2014.

This year’s Sept. 2 due date, pushed back two days because the normal Aug. 31 deadline falls on a Sunday, generally applies to Form 2290 and the accompanying tax payment for the tax year that begins on July 1, 2014, and ends on June 30, 2015. Returns must be filed and tax payments made by Sept. 2 for vehicles used on the road during July. For vehicles first used after July, the deadline is the last day of the month following the month of first use.

Though some taxpayers have the option of filing Form 2290 on paper, the IRS encourages all taxpayers to take advantage of the speed and convenience of filing this form electronically and paying any tax due electronically. Taxpayers reporting 25 or more vehicles must e-file. A list of IRS-approved software providers can be found on IRS.gov.

Paper returns must be mailed and postmarked by midnight on Sept. 2. As usual, IRS offices will be closed on Labor Day, Monday, Sept. 1.

The highway use tax applies to highway motor vehicles with a taxable gross weight of 55,000 pounds or more. This generally includes trucks, truck tractors and buses. Ordinarily, vans, pick-ups and panel trucks are not taxable because they fall below the 55,000-pound threshold. The tax of up to $550 per vehicle is based on weight, and a variety of special rules apply, explained in the instructions to Form 2290.

More information can be found in the Trucking Tax Center at IRS.gov/truckers.

IRS Adopts “Taxpayer Bill of Rights”

10 Provisions to be Highlighted on IRS.gov, in Publication 1

Taxpayer Bill of RightsIR-2014-72, June 10, 2014  WASHINGTON ― The Internal Revenue Service today announced the adoption of a “Taxpayer Bill of Rights” that will become a cornerstone document to provide the nation’s taxpayers with a better understanding of their rights.

A 2012 taxpayer survey conducted by the Taxpayer Advocate Service (TAS) showed that less than half of U.S. taxpayers believed they had rights – and only 11% said they knew what the rights were.

The Taxpayer Bill of Rights takes the multiple existing rights embedded in the tax code and groups them into 10 broad categories, making them more visible and easier for taxpayers to find on IRS.gov.

Publication 1, “Your Rights as a Taxpayer,” has been updated with the 10 rights and will be sent to millions of taxpayers this year when they receive IRS notices on issues ranging from audits to collection. The rights will also be publicly visible in all IRS facilities for taxpayers and employees to see.

“The Taxpayer Bill of Rights contains fundamental information to help taxpayers,” said IRS Commissioner John A. Koskinen. “These are core concepts about which taxpayers should be aware. Respecting taxpayer rights continues to be a top priority for IRS employees, and the new Taxpayer Bill of Rights summarizes these important protections in a clearer, more understandable format than ever before.”

The IRS released the Taxpayer Bill of Rights following extensive discussions with the Taxpayer Advocate Service, an independent office inside the IRS that represents the interests of U.S. taxpayers. Since 2007, adopting a Taxpayer Bill of Rights has been a goal of National Taxpayer Advocate Nina E. Olson, and it was listed as the Advocate’s top priority in her most recent Annual Report to Congress.

Congress has passed multiple pieces of legislation with the title of ‘Taxpayer Bill of Rights,’” Olson said. “However, taxpayer surveys conducted by my office have found that most taxpayers do not believe they have rights before the IRS and even fewer can name their rights. I believe the list of core taxpayer rights the IRS is announcing today will help taxpayers better understand their rights in dealing with the tax system.

The tax code includes numerous taxpayer rights, but they are scattered throughout the code, making it difficult for people to track and understand. Similar to the U.S. Constitution’s Bill of Rights, the Taxpayer Bill of Rights contains 10 provisions. They are:

  1. The Right to Be Informed
  2. The Right to Quality Service
  3. The Right to Pay No More than the Correct Amount of Tax
  4. The Right to Challenge the IRS’s Position and Be Heard
  5. The Right to Appeal an IRS Decision in an Independent Forum
  6. The Right to Finality
  7. The Right to Privacy
  8. The Right to Confidentiality
  9. The Right to Retain Representation
  10. The Right to a Fair and Just Tax System

The rights have been incorporated into a redesigned version of Publication 1, a document that is routinely included in IRS correspondence with taxpayers. Millions of these mailings go out each year. The new version has been added to IRS.gov, and print copies will start being included in IRS correspondence in the near future.

The timing of the updated Publication 1 with the Taxpayer Bill of Rights is critical because the IRS is in the peak of its correspondence mailing season as taxpayers start to receive follow-up correspondence from the 2014 filing season. The publication initially will be available in English and Spanish, and updated versions will soon be available in Chinese, Korean, Russian and Vietnamese.

The IRS has also created a special section of IRS.gov to highlight the 10 rights. The web site will continue to be updated with information as it becomes available, and taxpayers will be able to easily find the Bill of Rights from the front page. The IRS internal web site for employees is adding a special section so people inside the IRS have easy access as well.

As part of this effort, the IRS will add posters and signs in coming months to its public offices so taxpayers visiting the IRS can easily see and read the information.

“This information is critically important for taxpayers to read and understand,” Koskinen said. “We encourage people to take a moment to read the Taxpayer Bill of Rights, especially when they are interacting with the IRS. While these rights have always been there for taxpayers, we think the time is right to highlight and showcase these rights for people to plainly see.”

“I also want to emphasize that the concept of taxpayer rights is not a new one for IRS employees; they embrace it in their work every day,” Koskinen added. “But our establishment of the Taxpayer Bill of Rights is also a clear reminder that all of the IRS takes seriously our responsibility to treat taxpayers fairly.

Koskinen added, “The Taxpayer Bill of Rights will serve as an important education tool, and we plan to highlight it in many different forums and venues.”

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Summer Weddings Mean Tax Changes

We Do More Than TaxesEven the best wedding planner may not think of the tax changes that come with getting married, so taxes may not be high on your summer wedding plan checklist. However - you should be aware of the tax issues that come along with marriage.

The IRS has provided some quick guidelines and tips that may help keeping those issues to a minimum.  One way is by letting your tax professional know; they can amend your records now and inform you of any changes that will affect you and next year’s filing. If you don’t have a tax professional – don’t fret!  Just give us a call at the number to the left.

In the meantime, here are some basic tips:

Name change. The names and Social Security numbers on your tax return must match your Social Security Administration records. If you change your name, report it to the SSA. To do that, file Form SS-5, Application for a Social Security Card. You can get the form on SSA.gov, by calling 800-772-1213 or from your local SSA office.

Change tax withholding.  A change in your marital status means you must give your employer a new Form W-4, Employee’s Withholding Allowance Certificate. If you and your spouse both work, your combined incomes may move you into a higher tax bracket. Use the IRS Withholding Calculator tool at IRS.gov to help you complete a new Form W-4. See Publication 505, Tax Withholding and Estimated Tax, for more information.

Changes in circumstances.  If you receive advance payment of the premium tax credit in 2014, it is important that you report changes in circumstances, such as changes in your income or family size, to your Health Insurance Marketplace. You should also notify the Marketplace when you move out of the area covered by your current Marketplace plan. Advance payments of the premium tax credit provide financial assistance to help you pay for the insurance you buy through the Health Insurance Marketplace. Reporting changes will help you get the proper type and amount of financial assistance so you can avoid getting too much or too little in advance.

Address change.  Let the IRS know if your address changes. To do that, file Form 8822, Change of Address, with the IRS. You should also notify the U.S. Postal Service. You can ask them online at USPS.com to forward your mail. You may also report the change at your local post office.

Change in filing status.  If you’re married as of Dec. 31, that’s your marital status for the whole year for tax purposes. You and your spouse can choose to file your federal income tax return either jointly or separately each year. You may want to figure the tax both ways to find out which status results in the lowest tax.

Note for same-sex married couples: If you are legally married in a state or country that recognizes same-sex marriage, you generally must file as married on your federal tax return. This is true even if you and your spouse later live in a state or country that does not recognize same-sex marriage. See irs.gov for more information on this topic.

For more information, visit IRS.gov. You can also get IRS forms and publications on IRS.gov or by calling 800-TAX-FORM (800-829-3676).

IRS YouTube Videos:

IRS Podcasts:

Tax Information About Same-Sex Marriage – English | Spanishnow please take go sit down

FTB Of CA Penalties and their meaning

AN EDUCATED TAXPAYER IS OUR BEST CUSTOMER.

We help our clients understand the ever-changing federal and state tax laws so they can maximize their tax deductions, and adopt best recordkeeping practices.

Franchise Tax Board, State of CAMany of our clients have come to us after having a bad tax preparation experience that resulted in penalties and interest.  When we come across a reference document that we feel is valuable for the taxpayer – we promote it.

We have linked to the 18-page Penalties and Interest Reference Table published by the Franchise Tax Board of California.

  1. If I pay my taxes late, what interest and penalties will I be charged?
  2. What are past and current interest and estimate penalty rates?
  3. I have an extension of time to file my return. Why did I get a penalty?
  4. I filed my return on time. Why did I get a penalty?

FTB of CA Penalty Reference ChartPenalty reference chart (pdf)

 

 

 

 

 

 

Tax Incentives For Employers Hiring Workers

Franchise Tax Board, State of CASACRAMENTO – Building on efforts to grow California’s economy and help businesses create jobs, Governor Edmund G. Brown Jr. announced new tax incentives for employers hiring workers in Fresno, Merced and Riverside.

“The state’s economy is steadily improving and more than a million Californians are back to work after the massive mortgage meltdown,” said Governor Brown. “These tax credits will spur new jobs and help communities hardest hit by the recession.” Continue reading

Critical IRS Deadlines in the Year 2014

May 15, 2014

Deadline for non-profit organizations to file information returns (Form 990) for the year 2013, or request an extension (Form 8868).

June 2, 2014

Deadline for financial institutions to send out Form 5498 to report balances in an individual retirement account for the year 2013.

June 16, 2014

2nd quarter estimated tax payments due for the 2014 tax year. (The normal deadline is June 15th, which falls on a Sunday, so the deadline is pushed to the next business day.)

Deadline for US citizens living abroad to file individual tax returns and to pay any tax due. You can request an additional 4-month extension (Form 4868). (You can request an automatic extension by April 15th instead if you want to.) Two tax breaks important for Americans working abroad are the Foreign Earned Income Exclusion and the Foreign Tax Credit, .

June 30, 2014

Deadline to file Foreign Bank Account Report for the year 2013. This report is required if you have over $10,000 (in aggregate) held in foreign bank accounts. Foreign Bank Account Reports have a new form number (FinCEN Form 114) and must be filed electronically. Extensions of time to file are not available.

September 15, 2014

3rd quarter estimated tax payments due for the 2014 tax year.

Final deadline to file corporate tax returns for the year 2013 if an extension was requested. (Forms 1120, 1120A, 1120S).

Final deadline to file trust income tax returns (Form 1041) for the year 2013 if an extension was requested.

Final deadline to file partnership tax returns (Form 1065) for the year 2013 if an extension was requested.

October 1, 2014

Final deadline for self-employed persons or small employers to establish a SIMPLE-IRA for the year 2014.

October 15, 2014

Final deadline to file individual tax returns (with extension). (Forms 1040, 1040A, 1040EZ.)

Last day the IRS will accept an electronically filed tax return for the year 2013. If filing after October 15th, you’ll need to mail in your tax return for processing.

Final deadline to fund a SEP-IRA or solo 401(k) for tax year 2013 if you requested an automatic extension of time to file.

November 2014

Start planning any year-end tax moves.

December 1, 2014

If you are covered by an HSA-compatible health insurance policy as of December 1st, you’ll be eligible to contribute the full amount to a Health Savings Account for the year.

December 31, 2014

Last day to make any tax moves for the year 2014. Last day to set up a solo 401(k) for self-employed persons.

Marital status on this date determines your marital status for the whole year.

Sources:  http://taxes.about.com/od/Federal-Income-Taxes/qt/tax-deadlines.htm;
Tax Calendars for 2014 (IRS Publication 509)

As the Tax Season ends, IRS answers: Where’s My Refund?

Larger IRSIR-2014-54, April 17, 2014

WASHINGTON — With the close of the tax filing season, the vast majority have filed their income tax returns and received their income tax refunds. As of last Friday, the IRS had received almost 113 million tax returns and issued more than 85 million refunds, about 78 percent of all the refunds the agency will issue this year.

However, taxpayers who have not yet received their refunds can use the “Where’s My Refund?” on IRS.gov or on the smartphone application IRS2Go 4.0 to find out about the status of their income tax refunds. As of April 11, 2014, Where’s My Refund? has been accessed almost 160 million times.

The Where’s My Refund?tool enables taxpayers to track the status of their refund. Initial information will normally be available within 24 hours after the IRS receives the taxpayer’s e-filed return or four weeks after the taxpayer mails a paper return to the IRS. The system updates only once every 24 hours, usually overnight, so there’s no need to check more often.

Taxpayers should have their Social Security number, filing status and exact refund amount when accessing Where’s My Refund?

Taxpayers can find more information about refunds and other tax topics at IRS.gov.

2014 FILING SEASON STATISTICS
Cumulative statistics comparing 4/12/13 and 4/11/14
Individual Income Tax Returns: 2013 2014 % Change
Total Receipts 112,403,000 112,741,000 0.3
Total Processed 103,880,000 110,266,000 6.1
E-filing Receipts:
TOTAL 99,787,000 101,289,000 1.5
Tax Professionals 62,163,000 61,956,000 -0.3
Self-prepared 37,624,000 39,332,000 4.5
Web Usage:
Visits to IRS.gov 278,307,884 251,540,768 -9.6
Total Refunds:
Number 84,581,000 85,262,000 0.8
Amount    $229.607   Billion   $234.547   Billion 2.2
Average refund $2,715 $2,751 1.3
Direct Deposit Refunds:
Number 69,680,000 69,924,000 0.3
Amount    $202.188   Billion   $202.167   Billion -0.01
Average refund $2,902 $2,891 -0.4

Source: http://www.irs.gov/uac/Newsroom/As-the-Tax-Season-ends-IRS-answers:-Where’s-My-Refund

 

 

Business Health Plan Review and Options

BUSINESSES NEED TO REVIEW HEALTH PLAN 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 IRS.gov
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.

Sources: IRS.gov

 

 

 

 

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.

Source: http://smallbusiness.foxbusiness.com/finance-accounting/2014/02/28/how-tax-reform-act-2014-will-affect-your-small-business/

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.

ACA_banner

Consumers are applying and enrolling in quality, affordable health coverage every day using HealthCare.gov 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 HealthCare.gov 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.

https://www.healthcare.gov/blog/cancelled-plan-you-ve-got-coverage-options/

Nonprofit Organizations Conducting Campaign Activity

CAUTION TAX FORMS NEEDED!REPORTING REQUIREMENTS SPOTLIGHT NAMES OF CONTRIBUTORS and AMOUNTS

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

A TAX BY WHATEVER NAME IS STILL PAINFUL

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: investorwords.com). 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.

Source: http://www.irs.gov/uac/Affordable-Care-Act-Tax-Provisions

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