Joshua Jenson, CPA. Managing Partner Joshua Jenson, CPA, P.C. & Associates. What’s New for 2014?. Over 50 Tax Breaks Expired as of December 31, 2013!. Important Expired Business Tax Breaks Research credit Work opportunity credit 15-year cost recovery for qualified property
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Joshua Jenson, CPA, P.C. & Associates
Important Expired Business Tax Breaks
Important Expired Individual Tax Breaks
Seven ordinary income brackets
Three capital gains brackets
With the NII tax, high-income individuals face a combined tax rate of 43.4% on ordinary investment income and 23.8% on long-term capital gains.
The Tax Adviser, September 2014, p. 672
Personal Exemption Phaseout (PEP)
Itemized Deductions (Pease) Limitations
Big Impact on High-Income Individuals
What’s not included?
Wages and SE income
Active trade or business income
Retirement plan distributions
Municipal bond interest
Pass 750 hours test
Over ½ of your personal services provided were related to real estate businesses
Must materially participate
Key is documentation. You must be able to prove status to IRS.
Substantiating Health Coverage
Individual Shared Responsibility Provision
All US citizens and legal residents required to have qualifying minimum essential health coverage starting January 1, 2014.
Greater of $95 or 1% of household income
Since employer reporting pushed back to 2015, taxpayer must collect information to document coverage.
Moss-Adams 2014 Year-End Tax Planning Guide for Individuals, www.mossadams.com
Pick the Best Plan
Larger deductions for 401(k) and Keogh plans…must have in place by year-end
Don’t Forget the Kids
Earned Income = Contribute to IRA
New IRA Rollover Rules
New once-a-year limit
on IRA rollovers
Roth IRA Conversions
Traditional IRA’s can be converted to Roth IRA’s when beneficial
2014 Limit = $2,500
2014 Limit = $25,000
Watch Out for the Phase-Out
If purchases exceed $200,000, the deduction is decreased dollar-for-dollar above the threshold.
SUV & Trucks over 6,000 GVWR qualify for up to $25,000 immediate deduction.
Bonus Depreciation is only available for long-production-period property and certain aircraft.
Qualified Leasehold Improvements now have a depreciation recovery life of 39 years.
Because charitable contributions are itemized deductions, they may be limited or phased out due to Pease limitations.
Sponsor projects or programs through a business instead. There are no phase-outs on that!
Estate Exclusion Amount
Gift Tax Limit
For 2014, the 3.8% tax is imposed on the lesser of the undistributed net investment income for the tax year or the excess of the AGI over $12,150.
Each spouse can give $14,000 to an individual per year
That’s $28,000 that can be given and received tax-free.
Final regs change method of deducting costs of trust or estates. Trustees must now split costs between those that are subject to 2% floor from costs that are not subject to the floor.
If you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, exceeding certain thresholds, the Bank Secrecy Act may require you to report the account yearly to the Department of Treasury by electronically filing a Financial Crimes Enforcement Network (FinCEN) 114, Report of Foreign Bank and Financial Accounts (FBAR).
FinCEN introduces new forms
On September 30, 2013, FinCEN posted a notice on their website announcing the current FBAR form, FinCEN Report 114, Report of Foreign Bank and Financial Accounts. FinCEN Report 114 supersedes the previous years’ form TD F 90-22.1 and is only available online through the BSA E-Filing System website.
Same-sex marriage now is legal in Oklahoma. Oklahoma couples began to marry after a surprise move by the U.S. Supreme Court not to take on the issue of whether states can ban same-sex marriage. (October 2014)
Special Thanks to Megan Fredrickson, CPA
Director of Tax & Senior Tax Manager at Joshua Jenson, CPA, P.C. & Associates