Category Archives: 2014 Tax Changes

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

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.

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

Related Links:  http://www.irs.gov/uac/Affordable-Care-Act-Tax-Provisions-Home

 

 

 

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 →

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 →

10 Things The IRS Needs To Know About Your Child or Dependent Care.

Small CCP teaching childrenIF YOU WANT TO GET CREDIT FOR CHILD and DEPENDENT CARE, THE IRS NEEDS TO KNOW…  

If you paid someone to care for your child, spouse, or dependent last year, you may be able to claim the Child and Dependent Care Credit on your federal income tax return.

Below are 10 things the IRS wants you to know about claiming a credit for child and dependent care expenses. Continue reading →

Moves To Lower Your 2013 Tax Bill

1040 Sm Photo IstockTAX MOVES TO MAKE BEFORE CHRISTMAS.
Ways to reduce your 2013 tax bill. 

December 31 is approaching quickly – and there are some things you can do to lower your tax bill.  We encourage our clients to come in for a review, especially if there are life-situation changes. Did they marry or divorce? Is there are new child? Is there unscheduled income, or benefits. We want to look at that before the close of the year.   

As part of our updates on the laws that are changing, we are sharing valuable articles for your convenience.

This article is the first of two we will bring you from one of MarketWatch of the Wall Street Journal.

 

Continue reading →

Tax Benefit If You Rent to Relatives

For Rent signDid you know you can save taxes when you rent to relatives?

Want renters you know, trust, like and just happen to be related?  No problem.  In fact, it is actually a pretty good idea.

According to the Bradford Tax Institute, renting is still a business agreement – even if your tenant is your college-age child or your retired in-laws.  As with every business agreement, this rental requires a clear understanding of what is and isn’t permitted by law. So set down the ground rules, then you can relax.

The Core to a Safe Rental Strategy

Here’s a good tip to remember when renting to relatives (it will help you escape the rental triple whammy): Charge a well-documented and market-supported fair rent to your relatives.

That way, your rental property will not get misconstrued as a second home.

Here are a few ways to prove the rent you charge is fair:

  • Print listings for similar rentals in the same neighborhood from craigslist.com
  • Cut out comparable rental ads from local newspaper want ads
  • Get letters from property managers
  • Obtain an independent appraisal

To recap: Be sure to charge your relatives fair rent. Keep your relationship in good standing and your tax deductions on solid ground

Source: Tax Reduction Letter.

 

IRS Provides Answers to FAQ on Itemized Deductions for Medical Expenses

Larger IRSQuestions and Answers: 2013 Changes to the Itemized Deduction for Medical Expenses

1. When do changes to the itemized deduction for medical expenses take effect?

The rules are changing if you plan to itemize medical deductions on your 2013 federal tax return that you will file in 2014. The change will not affect income tax returns for the 2012 taxable year that will be filed in 2013. Continue reading →

2013 changes to itemized deduction for medical expenses

Larger IRSNow is the time to talk with your tax preparer to understand the other 2013 changes to your itemized deductions

The rules are changing if you plan to itemize medical deductions on your 2013 federal tax return that you will file in 2014. It does not affect income tax returns for the 2012 taxable year filed in 2013.

Beginning Jan. 1, 2013, you can claim deductions for medical expenses not covered by your health insurance that exceed 10 percent of your adjusted gross income. This change affects your 2013 tax return that you will file in 2014.

There is a temporary exemption from Jan. 1, 2013 to Dec. 31, 2016 for individuals age 65 and older and their spouses. If you or your spouses are 65 years or older or turned 65 during the tax year you are allowed to deduct unreimbursed medical care expenses that exceed 7.5% of your adjusted gross income. The threshold remains at 7.5% of AGI for those taxpayers until Dec. 31, 2016.

Beginning Jan. 1, 2017, all taxpayers may deduct only the amount of the total un reimbursed allowable medical care expenses for the year that exceeds 10% of your adjusted gross income.

Page Last Reviewed or Updated: 06-Aug-2013

How Will The Affordable Care Act Affect Child Care Providers?

January 29 Header for ChildCare Site

Child Care Tax Specialists takes a look at the comprehensive landmark changes in the health care law and its impact.  Read the full post here http://childcaretaxspecialists.com/how-will-the-affordable-care-act-impact-child-care-professionals/

HOW ARE YOU AFFECTED BY THE 2014 INFLATION ADJUSTMENTS

Larger IRS2014 Inflation Adjustments

IR-2013-87, Oct. 31, 2013

WASHINGTON — For tax year 2014, the Internal Revenue Service announced today annual inflation adjustments for more than 40 tax provisions, including the tax rate schedules, and other tax changes. Revenue Procedure 2013-35 provides details about these annual adjustments.

The tax items for tax year 2014 of greatest interest to most taxpayers include the following dollar amounts.

  • The tax rate of 39.6 percent affects singles whose income exceeds $406,750 ($457,600 for married taxpayers filing a joint return), up from $400,000 and $450,000, respectively. The other marginal rates – 10, 15, 25, 28, 33 and 35 percent – and the related income tax thresholds are described in the revenue procedure.
  • The standard deduction rises to $6,200 for singles and married persons filing separate returns and $12,400 for married couples filing jointly, up from $6,100 and $12,200, respectively, for tax year 2013. The standard deduction for heads of household rises to $9,100, up from $8,950.
  • The limitation for itemized deductions claimed on tax year 2014 returns of individuals begins with incomes of $254,200 or more ($305,050 for married couples filing jointly).
  • The personal exemption rises to $3,950, up from the 2013 exemption of $3,900. However, the exemption is subject to a phase-out that begins with adjusted gross incomes of $254,200 ($305,050 for married couples filing jointly). It phases out completely at $376,700 ($427,550 for married couples filing jointly.)
  • The Alternative Minimum Tax exemption amount for tax year 2014 is $52,800 ($82,100, for married couples filing jointly). The 2013 exemption amount was $51,900 ($80,800 for married couples filing jointly).
  • The maximum Earned Income Credit amount is $6,143 for taxpayers filing jointly who have 3 or more qualifying children, up from a total of $6,044 for tax year 2013. The revenue procedure has a table providing maximum credit amounts for other categories, income thresholds and phaseouts.
  • Estates of decedents who die during 2014 have a basic exclusion amount of $5,340,000, up from a total of $5,250,000 for estates of decedents who died in 2013.
  • The annual exclusion for gifts remains at $14,000 for 2014.
  • The annual dollar limit on employee contributions to employer-sponsored healthcare flexible spending arrangements (FSA) remains unchanged at $2,500.
  • The foreign earned income exclusion rises to $99,200 for tax year 2014, up from $97,600, for 2013.
  • The small employer health insurance credit provides that the maximum credit is phased out based on the employer’s number of full-time equivalent employees in excess of 10 and the employer’s average annual wages in excess of $25,400 for tax year 2014, up from $25,000 for 2013.

Details on these inflation adjustments and others not listed in this release can be found in Revenue Procedure 2013-35, which will be published in Internal Revenue Bulletin 2013-47 on Nov. 18, 2013.

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Page Last Reviewed or Updated: 31-Oct-2013