On December 16, 2014, the US Congress passed a much anticipated 2014 tax extenders bill that includes provisions for reinstating 50% bonus depreciation and increasing Section 179 back to 2013 limits of $500,000.
The bill still needs signed into law by Obama, but he is expected to do so.
See here for a more in-depth discussion.
The IRS published Fact Sheet 2014-09 in November with details on the key provisions of the Affordable Care Act (ACA) affecting individuals on their 2014 tax returns.
The main takeaway is that individuals that did not have health insurance coverage for the full year in 2014 must either apply for an exemption or pay a penalty, affectionately being referred to as a "shared responsibility payment."
That penalty can be steeper than you think; for 2014, it can be 1.0% of your income, and beginning on January 1, 2015, that rate jumps to 2.5% of income. So, let's say you file your 2014 tax return in March of 2015. By the time you realize what your 2014 penalty is, you will have already accrued three months of penalty for 2015. Not to mention that by March, open enrollment on the government sponsored marketplace will be closed and you will not be eligible for the credit subsidy!
Check out the entire IRS Fact Sheet here.
In a recent IRS FAQ, the IRS reiterated that arrangements in which an employer reimburses its employees' for the cost of individual (i.e. not 'group') health plans on a pre-tax basis is prohibited.
In the past, employers have been permitted to reimbursed an employee for the cost of health insurance policy premiums (or pay those premiums directly) and exclude those payments from the employee's gross wages. Such an arrangement is called an "Employer Payment Plan", and as a result of the Affordable Care Act (ACA), are now considered to be "group health plans subject to the market reforms, including the prohibition on annual limits for essential health benefits and the requirement to provide certain preventive care without cost sharing." Employer Payment Plans cannot be integrated with individual policies in order to satisfy these market reforms, and therefore may be subject to a $100/day excise tax, per employee!
The bottom line is that employer reimbursements (or direct payments to the insurer) for the cost of an employee's individual health insurance policy can no longer be made on a pre-tax basis. This does not prohibit the employer from making those same payments on an after-tax basis.
The Internal revenue service released the 2014 Standard Milage Rates for taxpayers' optional use in computing the deductible costs of operating an automobile for business, charitable, or medical purposes.
The rates for 2014 are as follows:
$0.560 per mile for business miles
$0.140 per mile for charitable miles
$0.235 per mile for medical miles
As a comparison, the rates for 2013 were:
$0.565 per mile for business miles
$0.140 per mile for charitable miles
$0.240 per mile for medical miles
For more information, see:
IRS Notice 2013-80
IRS Notice 2012-72
The IRS has released the per diem rates that will apply to reimbursements paid to employees on or after October 1, 2013 for travel away from home. The rates for 2013-2014 are:
$251 for travel to any high-cost locality, of which $65 is considered meals.
$170 for travel to any other CONUS locality, of which $52 is considered meals.
The rate for incidental expense only is $5.
For details and a list of high-cost localities, see IRS Publication 2013-65.
The IRS initiates radio silence as the October 15 due date looms less than two weeks away for individuals who requested a 6-month extension of time to file their 2012 income tax returns. Essentially all IRS services will be unavailable until government operations resume.
During this time "no live telephone customer service assistance will be available" and "walk-in taxpayer assistance centers will be closed." However, for those masochists out there, the automated telephone system will still be available. As if that is some kind of consolation.
The IRS has been kind enough to remind us that although the current budget crisis has sent much of the IRS on an indefinite hiatus, your tax obligations are afforded no such luxury. From irs.gov:
"Due to the current lapse in appropriations, IRS operations are limited. However, the underlying tax law remains in effect, and all taxpayers should continue to meet their tax obligations as normal.
Individuals and businesses should keep filing their tax returns and making deposits with the IRS, as they are required to do so by law. The IRS will accept and process all tax returns with payments, but will be unable to issue refunds during this time."
There's nothing like waiting until the last minute... and then waiting another day.
Late on January 1, 2013, the fix for the fiscal cliff passed the house and senate. The American Taxpayer Relief Act of 2012, which we can only assume is so named to commemorate the valiant way in which congress has protected American taxpayers by selflessly stepping up in the final hour to do the damned job it was elected to do, extends and/or makes permanent many of the Bush-era tax cuts for those making less than $400,000 ($450,000 married).
Here are the highlights of the bill:
In addition to these highlights, a host of other "Bush-era" credits and incentives have been extended or made permanent.
However, the bill did not address the sequestration (across-the-board spending cuts) but rather, postponed the deadline by two months.
While some may say the 11th-hour grandstanding by congress was unnecessary and entirely avoidable had they exercised marginally more maturity than a bunch of procrastinating college freshman, and that the air of self-congratulatory celebration after what was essentially a kick-the-can solution to the arguably more difficult decisions to be made on spending cuts was patronizing at best, one does have to admit that the ATRA of 2012 will result is less tax for most Americans. In other words, it could have been worse.
The American Taxpayer Relief Act which was passed today to prevent us from going over the "fiscal cliff" is apparently just a stop-gap measure.
Tax increases were not as bad as many feared and spending cuts were few and far between. The major effect of the law will be to delay "sequestration" (automatic across the board budget reductions). Congress will probably revisit tax policy and spending cuts when it tackles the expected increase in the nations's debt limit in February.
Call us for our take on how the law will effect you.