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Overview of 2014 Tax Increase Prevention Act

FINALLY….some certainty returns, but Continue Reading

IRS Mileage Rates for 2015 Announced

The IRS has issued the 2015 optional standard Continue Reading

Year-End Marital Status and Taxes: Timing Is Everything

As if the process of getting married (or Continue Reading

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Overview of 2014 Tax Increase Prevention Act

FINALLY….some certainty returns, but uncertainty returns in 14 more days as the “extenders” are generally only applicable for the 2014 tax year!  Congress recently passed the “Tax Increase Prevention Act of 2014.” This legislation, once again, extends expired or expiring individual, business, and energy provisions known as “extenders.” The extenders are a varied assortment of more than 50 individual and business tax deductions, tax credits, and other tax-saving laws which have been on the books for years but which technically are temporary because they have a specific end date. Congress has repeatedly temporarily extended the tax breaks for short periods of time (e.g., one or two years), which is why they are referred to as “extenders.” The new legislation generally extends the tax breaks retroactively, most of which expired at the end of 2013, for one year through 2014.  So, we will be right back to where we started in 15 days with the tax deductions, credits, etc. expiring for the 2015 tax year.

 

Congress also passed the Achieving a Better Life Experience (ABLE) Act of 2014.  The tax laws have long encouraged Americans to save for college for their kids and to save for their retirement, but for families of those with disabilities there was no tax-advantaged way for them to save for those individuals. The recently enacted “ABLE Act of 2014” contains an important new provision which changes that:  For 2015 tax years, individuals are allowed to create “ABLE” accounts, which are tax-free accounts that can be used to save for disability-related expenses.  Please call us to learn more about this “ABLE” Act.

 

Below is a list of the extenders.  Please call our office for details of how the new changes may affect you or your business.

 

Individual extenders

The following provisions which affect individual taxpayers are extended through 2014:

  • the $250 above-the-line deduction for teachers and other school professionals for expenses paid or incurred for books, certain supplies, equipment, and supplementary material used by the educator in the classroom;
  • the exclusion of up to $2 million ($1 million if married filing separately) of discharged principal residence indebtedness from gross income;
  • parity for the exclusions for employer-provided mass transit and parking benefits;
  • the deduction for mortgage insurance premiums deductible as qualified residence interest;
  • the option to take an itemized deduction for State and local general sales taxes instead of the itemized deduction permitted for State and local income taxes;
  • the increased contribution limits and carryforward period for contributions of appreciated real property (including partial interests in real property) for conservation purposes;
  • the above-the-line deduction for qualified tuition and related expenses; and
  • the provision that permits tax-free distributions to charity from an individual retirement account (IRA) of up to $100,000 per taxpayer per tax year, by taxpayers age 70 and ½ or older.

 

Business extenders

The following business credits and special rules are generally extended through 2014:

  • the research credit;
  • the temporary minimum low-income housing tax credit rate for nonfederally subsidized new buildings;
  • the military housing allowance exclusion for determining whether a tenant in certain counties is low-income;
  • the Indian employment tax credit;
  • the new markets tax credit;
  • the railroad track maintenance credit;
  • the mine rescue team training credit;
  • the employer wage credit for activated military reservists;
  • the work opportunity tax credit;
  • qualified zone academy bond program;
  • three-year depreciation for racehorses;
  • 15-year straight line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements;
  • 7-year recovery period for motorsports entertainment complexes;
  • accelerated depreciation for business property on an Indian reservation;
  • 50% bonus depreciation (extended before Jan. 1, 2016 for certain longer-lived and transportation assets);
  • the election to accelerate alternative minimum tax (AMT) credits in lieu of additional first-year depreciation;
  • the enhanced charitable deduction for contributions of food inventory;
  • the increase in expensing (up to $500,000 write-off of capital expenditures subject to a gradual reduction once capital expenditures exceed $2,000,000) and an expanded definition of property eligible for expensing;
  • the election to expense mine safety equipment;
  • special expensing rules for certain film and television productions;
  • the deduction allowable with respect to income attributable to domestic production activities in Puerto Rico;
  • the exclusion from a tax-exempt organization’s unrelated business taxable income (UBTI) of interest, rent, royalties, and annuities paid to it from a controlled entity;
  • the special treatment of certain dividends of regulated investment companies (RICs);
  • the definition of RICs as qualified investment entities under the Foreign Investment in Real Property Tax Act;
  • exceptions under subpart F for active financing income;
  • look-through treatment for payments between related controlled foreign corporations (CFCs) under the foreign personal holding company rules;
  • the exclusion of 100% of gain on certain small business stock;
  • the basis adjustment to stock of S corporations making charitable contributions of property;
  • the reduction in S corporation recognition period for built-in gains tax;
  • the empowerment zone tax incentives;
  • the American Samoa economic development credit; and
  • two provisions dealing with multiemployer defined benefit pension plans (dealing with an automatic extension of amortization periods and shortfall funding method and endangered and critical rules), are extended through 2015.

 

Energy-related extenders

The following energy provisions are retroactively extended through 2014:

  • the credit for nonbusiness energy property;
  • the second generation biofuel producer credit (formerly cellulosic biofuels producer tax credit);
  • the incentives for biodiesel and renewable diesel;
  • the Indian country coal production tax credit;
  • the renewable electricity production credit, and the election to claim the energy credit in lieu of the renewable electricity production credit;
  • the credit for construction of energy efficient new homes;
  • second generation biofuels bonus depreciation;
  • the energy efficient commercial buildings deduction;
  • the special rule for sale or disposition to implement federal energy regulatory commission (FERC) or State electric restructuring policy for qualified electric utilities;
  • the incentives for alternative fuel and alternative fuel mixtures; and
  • the alternative fuel vehicle refueling property credit.

IRS Mileage Rates for 2015 Announced

The IRS has issued the 2015 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.   What Gas Costs these Days The national average price of a gallon of regular unleaded gas was $2.62 on December 11, 2014. This is down from the average […]

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Year-End Marital Status and Taxes: Timing Is Everything

As if the process of getting married (or divorced) isn’t difficult enough, couples also need to take income tax considerations into account before tying (or untying) the knot. That’s particularly true for those who plan a change in marital status late this year or early next year. A taxpayer’s marital status for the entire year is […]

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Tax Court Settles the Score on Sports Collectibles Activity

Are you a collector of antiques, artifacts or other goods? If your passion evolves into a full-fledged business with a profit motive, you may use a resulting tax loss to offset other income on your return. However, if the IRS classifies the activity as just a hobby — as it frequently does — the tax benefits […]

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Think Outside the Gift Box this Holiday Season

Many businesses scramble around at year end to come up with clever, relevant holiday gifts to send to customers to reinforce brands and cement business ties. But the most memorable ideas aren’t necessarily the most expensive. In today’s high-paced, electronic world, a well-thought-out holiday card with a personalized, handwritten message can sometimes be a refreshing change […]

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SEC Crackdown: How Effective Are Your Anti-Fraud Controls?

The Securities and Exchange Commission (SEC) filed a record 755 enforcement actions in the fiscal year that ended in September 30, 2014, covering a wide range of fraud schemes and financial misconduct. The investigations have led to roughly $4.2 billion in disgorgement and penalties in fiscal year 2014 — significantly higher than the amounts collected in […]

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IRS Announces Various Tax Benefit Increases for 2015

For tax year 2015, the IRS recently announced annual inflation adjustments for many tax provisions, including the tax rate schedules, and other tax changes. IRS Revenue Procedure 2014-61 provides details about these annual adjustments. The tax items for tax year 2015 of greatest interest to most taxpayers include the following dollar amounts: Tax Item 2015 2014 Highest tax […]

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Ten Year-End Tax Planning Ideas for Individuals

Another year is winding down. Before the hustle and bustle of the holidays sets in, it’s a good time to brainstorm ideas to lower your 2014 tax bill. Here’s an overview of what’s happening in the world of tax — and 10 simple tax-saving strategies that you can implement before year end. Setting the Current Federal […]

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IRS and Social Security Announce Increased Benefits for 2015

With the 2015 tax year right around the corner, there is good news coming from the IRS. According to a recent announcement, the tax agency has increased several tax breaks due to inflation adjustments. Social Security Checks to Increase Too Monthly Social Security and Supplemental Security Income (SSI) benefits for more than 64 million Americans will […]

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