Highlights of 2014 Tax
| Tax Season Starts January 20, 2015: IRS starts to process individual tax returns on January 20, 2015.
Mandatory Health Insurance Requirement: All people in the United States, with certain exceptions, must have minimum essential health care insurance, or they will be subject to a penalty.
Already insured:If you are already insured through an
employer plan, Medicare, Medicaid, the Veteran
Administration, or a private plan that provides minimum
essential care, you will not be subject to any penalties under Affordable Care Act.
Form 1095-A: If you purchased health care insurance through the Marketplace for 2014, you should receive a Form 1095-A by the end of January, 2015.
Itemized deduction and personal exemption limitation:Phase-out rule applies if adjusted gross income (AGI) exceeds $254,200 (Single), $305,050 (MFJ/QW), $279,650 (HOH), $152,525 (MFS).
Alternative Minimum Tax exemption: $52,800 for unmarried individuals and $82,100 for MFJ, and $41,050 for MFS.
Additional Medicare taxes:
0.9% additional Medicare Tax on wages and net self-employment income exceeding $250,000 (MFJ), $125,000 (MFS), or $200,000 (any other filing status).
3.8% additional Medicare Tax on net investment income exceeding $250,000 (MFJ), $125,000 (MFS), or $200,000 (any other filing status).
Q&As for Additional Medicare Tax
AGI floor for Medical Expense: The AGI floor is 10% if you and your spouse are under age 65. If either you or your spouse is age 65 or older, AGI floor is still 7.5%.
American Opportunity Tax Credit : The credit is now effective through 2017.
Foreign earned income exclusion: $99,200 for 2014.
Simplified method for Home Office deduction:The method allows for a deduction of $5 per square foot of home office, limited to 300 square foot ($1,500 max) regardless of actual cost. No depreciation expense is allowed with this method.
Tax rates on long-term capital gain and qualified dividend income: 0% for taxpayers with 10% or 15% tax bracket; 15% for taxpayers with 25% to rate below 39.6% bracket; 20% for taxpayers with 39.6% bracket.
Brokerage Form 1099 due is Feb 15: Your brokerage company will issue Form 1099 by February 15. Broker reporting of cost basis in 1099-B includes sales of mutual fund shares acquired after 2011. In case you received a revised/corrected 1099 statement, please immediately provide the new information to us. For capital gain calculation, please obtain Gain/Loss statement, if not included in your 1099.
Find Statement K-1 of Publicly Traded Partnership: You can find your K-1 online at http://taxpackagesupport.com/.
|Bonus depreciation: 50% of the cost of business property acquired in 2014.
Standard mileage rates:
56.0 cents per mile for business;
23.5 cents per mile for medical and moving; and
14.0 cents per mile for charitable volunteers.
(Rate for business includes 22.0 cents of depreciation.)
Vehicle depreciation limits: Max depreciation for a car placed in service in 2014 is $11,160, if bonus depreciation applies; otherwise $3,160. For a light truck and van, $11,460 and $3,460, respectively.
Annual exclusion for gifts: Per-donee exclusion for gifts of present interests is $14,000.
Extension of Popular Tax Provisions:
State and local general sales taxes
Tuition and fees deduction
Qualified principal residence debt forgiveness
Mortgage insurance premiums
Energy tax provisions
Section 179 expense deduction
Leasehold & retail improvement and restaurant property
Small business health care tax credit: Eligible employers that pay at least 50% of the health insurance premiums for their employees in 2014 may be able to claim 50% credit, but starting 2014 only for employees enrolled in qualified plans through health insurance exchange.
New College Access Tax Credit (California return): New state tax credit for taxpayers who make authorized
cash contributions to College Access Tax Credit Fund,
available for taxable years 2014 through 2016.
Foreign Account Reporting Requirements:
FinCEN Report 114, replacing TD F 90-22.1 Each US person who has a financial interest in or signature authority over any foreign bank and financial accounts that exceed $10,000 in aggregate value in any time during the calendar year must report to Dept of Treasury by June 30 of the succeeding year. This form is not filed with your tax return; you need to e-file this form at http://bsaefiling.fincen.treas.gov/main.html.
Form 8938 must be filed with your tax return if you hold any interest in a specified foreign financial asset and the aggregate value of all those assets exceeds $50,000. Be careful: penalty on non-filing is at least $10,000.
All Charitable Contributions require evidence: IRS is very strict with substantiation requirement for charitable contribution deduction. IRS disallows deductions for any contribution of $250 or more unless the taxpayer substantiates the contribution by a contemporaneous written acknowledgement of the contribution by the donee organization. Make sure you keep receipts, acknowledgment letter, etc. For this reason, if you would like to make cash contribution, write a check.
Recordkeeping: Keeping well-organized tax record. Especially, many taxpayers tend to forget keeping business mileage logs if used their cars for business, required by IRS.