Certain Tax Benefits Increase in 2014; Important Information for Taxpayers

In 2014, Various Tax Benefits Increase Due to Inflation Adjustments

 

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.

Information on the New Health Care Bill Provided by the IRS

Lots of people are asking questions about the new Health Care Bill.  Yours truly is also learning the news ends and outs.  The hold up for some tax professionals is the wait for IRS affiliate tax attorneys to explain the Health Care Bill, so we don't misinterpret or get it wrong.  For some reason, the explanation of the new Health Care Bill is slow in coming.

 

The IRS has launched a new site and below is the information pertaining to that site and more information on the Health Care Bill

 

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The IRS has launched a new Affordable Care Act Tax Provisions website at IRS.gov/aca to educate individuals and businesses on how the health care law may affect them. The new home page has three sections, which explain the tax benefits and responsibilities for individuals and families, employers, and other organizations, with links and information for each group. The site provides information about tax provisions that are in effect now and those that will go into effect in 2014 and beyond.

Topics include premium tax credits for individuals, new benefits and responsibilities for employers, and tax provisions for insurers, tax-exempt organizations and certain other business types.

Visitors to the new site will find information about the law and its provisions, legal guidance, the latest news, frequently asked questions and links to additional resources.

Several other federal agencies have a role in implementing the health care law, including the Department of Health and Human Services, which has primary responsibility. To help locate additional online resources from the Department of Health and Human Services, the Department of Labor and the Small Business Administration, the IRS has issued a new Web-based flyer - Healthcare Law Online Resources (Publication 5093).

How to Legally Start a New Business for $49, Plus State Filing Fees, Determining the Business Structure

Before you take another step, one of the first things you have to do is decide on what business structure you want for your new business. The FREE Business Structure Wizard at CorpNet can help you decide based on your business goals and the tax benefits you want to take advantage of.

Determining the Business Structure


More importantly than tax benefits, depending on what type of business you are starting, you want to protect yourself and your family from liability. Using the Business Structure Wizard will help you make that decision, which includes legal factors, tax benefits, reporting and business structure.

Sole Proprietorship is usually the cheapest when it comes to paying to have your business taxes completed.  Sole Proprietorship includes your business income and expenses right on to your Form 1040 using a Schedule C.

You can use the FREE Business Structure Wizard to determine the best business structure.

The Business Structure Wizard guides users through a series of basic questions on their business, industry, finances, and long-term plans. The entire wizard should take approximately 5 minutes or less to complete and provides a recommended company structure based on the user's responses.

The wizard includes the following recommended business structures based on the user's responses: LLC (Limited Liability Company), C Corporation, S Corporation, Sole Proprietorship, Partnership, LLP (Limited Liability Partnership), and Non Profit Corporation. Help text provides additional details and explains the significance of each question. In addition, you can find helpful resources on each business structure, and if you'd like CorpNet.com can file and form the recommended business structure for you.

This is not something you want to take lightly. The business structure you select can affect your business in so many ways and is the determining factor in how you will report your business income and expenses to the IRS for the life of the business.  Use the FREE Business Structure Wizard  to determine the best business structure for your business.

 



OK, Here it is, the Official Notice from the IRS; Relief Available to Taxpayers; IRS

Relief Available To Many Extension Requesters Claiming Tax Benefits

IR-2013-31, March 20, 2013

WASHINGTON —The Internal Revenue Service today provided late-payment penalty relief to individuals and businesses requesting a tax-filing extension because they are attaching to their returns any of the forms that couldn’t be filed until after January.

The relief applies to the late-payment penalty, normally 0.5 percent per month, charged on tax payments made after the regular filing deadline. This relief applies to any of the forms delayed until February or March, primarily due to the January enactment of the American Taxpayer Relief Act.
Taxpayers using forms claiming such tax benefits as depreciation deductions and a variety of business credits qualify for this relief. A complete list of eligible forms can be found in Notice 2013-24, posted today on IRS.gov.

Individuals and businesses qualify for this relief if they properly request an extension to file their 2012 returns. Eligible taxpayers need not make any special notation on their extension request, but as usual, they must properly estimate their expected tax liability and pay the estimated amount by the original due date of the return.

The return must be filed and payment for any additional amount due must be made by the extended due date. Interest still applies to any tax payment made after the original deadline.

Further details on this relief, including instructions for responding to penalty notices, is available in Notice 2013-24.

Tax Benefits, Lower Cost of Living in Retirement

Thinking of joining millions of Americans who are moving offshore in order to live a better quality of life on a set retirement income?  You are not alone.  And this is fast becoming a really hot topic.

For more information on offshore tax havens, cheap and safe places to retire, how to manage your money in offshore retirement, health care and much more, you can visit our sister site: http://forgottosaveforretirement.com/   If you look to the far left of the page, you will find a link which thousands of visitors to this site have clicked on.  It's entitled:  "44 Things You Must Know Before Retiring or Investing Offshore.

We are not encouraging the "investing" offshore until you know what you are doing, and your state side Attorney has has an opportunity to look at the paper work.  However, we are saying that a decision to move offshore, or even to make your primary home offshore, could have some serious and positive end results when it comes to taxes.  Learn more: http://forgottosaveforretirement.com/