8 Tax Breaks Set to Expire at the End of 2013
April 15 will be here sooner than you think! With a little planning before the end of the year, you could take advantage of tax breaks to help you lower your tax bill. Several tax provisions are scheduled to expire at the end of this year. Many of these tax breaks have been extended in the past, so it’s possible Congress could extend them again. Click HERE for a look at eight tax breaks to consider now before they disappear.
2014 Inflation Adjustments
The IRS has released its list of inflation-adjusted tax amounts for 2014. The list includes tax rate tables for estates, trusts and various filing statuses, standard deduction amounts, personal exemption amounts, AMT exemption, and gift tax annual exclusion. Below is a full list of the items from the IRS:
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.
Details on these inflation adjustments and others not listed in this release can be found in Revenue Procedure 2013-35, which were published in Internal Revenue Bulletin 2013-47 on Nov. 18, 2013.
Tax Planning for Grandparents Helping With College
As the holiday season is upon us, this time of the year we find ourselves answering lots of questions from grandparents who want to use holiday gifts to help pay for or contribute to their grandchildren’s college education. The queries always revolve around one simple theme— how do I maximize my tax advantages when paying for my grandchild’s college expenses? There are a few options to consider and definitely some dos and don’ts. Our own Kelly Roberts has authored a nice piece on the subject that was featured in Carolina Business Connection. Read more HERE.
NC Employers Must Collect New Form NC-4 EZs or NC-4s
The North Carolina General Assembly recently enacted House Bill 998 which will affect individual taxes beginning on or after January 1, 2014. (These changes will not affect the tax returns you file on April 15, 2014) The new law eliminates all personal exemptions for taxpayers, their spouse, children, or any other qualifying dependents. As a result, every employer must have all employees provide a new Employee’s Withholding Allowance Certificate, either Form NC-4 EZ or Form NC-4 so the correct amount of State income tax is withheld for any payment periods beginning on or after January 1, 2014.
Read all about it HERE.
IRS Warns Consumers About New Phone Scam
The IRS is warning consumers about a very sophisticated phone scam that has been targeting taxpayers— especially recent immigrants— throughout the country.
Often using fake IRS badge numbers and names, the perpetrators inform victims they owe money to the IRS which must be paid immediately through pre-loaded debit cards or wire transfers. Victims who refuse are told they face arrest, deportation and/or suspension of business/driver’s license.
The IRS will never ask anyone for a credit card number over the phone. If consumers receive such a call, they should call the IRS at 1-800-829-1040 to verify any claims of money owed. They can also report the incident to the Treasury Inspector General for Tax Administration at 1-800-366-4484.
For more information, click HERE or call Scharf Pera & Co., PLLC at 704-372-1167.
NC Prepares for Final Tax Free Weekend for Appliances
This weekend (Friday 11/1 – Sunday 11/3) will mark the final weekend North Carolina shoppers can enjoy tax-free shopping on qualified Energy Star appliances. More details in this article from the Charlotte Observer.
IRS not issuing liens or levies, enforcement actions limited, during shutdown
As America continues to feel frustration over the current partial government shutdown, here are two good articles that let you know exactly what services the IRS can and cannot perform for the time being:
How the Government Shutdown Affects Taxpayers and Tax Practitioners
The failure of Congress to agree on a continuing spending resolution on Monday led to the first federal government shutdown since 1995–1996. The shutdown involves a large number of federal government functions, including many affecting taxpayers and tax practitioners.
According to the Journal of Accountancy, for starters, the shutdown brings a stop to all IRS taxpayer services, such as responding to taxpayer inquiries. During the shutdown, all IRS audits and examinations will stop. All non-automated collection activity will also stop. To find out more and how the shutdown affects you, click HERE.
At Least One Employee and $500K in Annual Revenue? Then You’ve Got a Deadline Coming Up 10/1/13!
If you have at least one employee and generate at least $500,000 in annual revenue, there is another healthcare requirement that applies to you–and you must act by October 1, 2013. As part of the Affordable Healthcare Act, you are required to send a notice to all employees via first-class mail or electronically* by October 1, 2013 informing them about the new government-run health insurance exchanges. The notification requirement applies to any business regulated under the Fair Labor Standards Act and the letters must be sent to all employees, full-time and part-time and regardless of their benefits plan status. You are not required to provide a separate notice to dependents covered under the plan who are not employees.
The letters must let the employees know that the exchange exists and provide other details to help employees understand how the exchange could help them. The letters must also be sent to any new employees who get hired after October 1, 2013 and within 14 days of the employee’s start date. The Department of Labor has released sample notices in order to help employers satisfy this notification requirement. Employers who offer health insurance to all or some of their workers can find a sample notice here while businesses that do not offer health insurance coverage will use an alternative notice found here.
While most health insurance providers are preparing this letter for their clients, you should contact your provider if you haven’t already received notification.
As always, feel free to contact Scharf Pera & Co., PLLC today if you have questions regarding this information.
*Electronic transmission is required to meet the Department of Labor’s electronic disclosure safe harbor rules.
Scharf Pera Participates in the 2013 NCACPA Day of Service
We had an amazing time at Charlotte’s Loaves and Fishes Food Bank participating in the “2013 NCACPA Day of Service” event sponsored by the North Carolina Association of Certified Public Accountants. Pictured are members of the Scharf Pera staff from left to right:
Richard Sponholz (System Administrator), Linda Mas (Staff Accountant), Robin Williams (Staff Accountant), Marcus Hughes (Staff Accountant), Kelly Roberts (Staff Accountant), Robert Phillips (Managing Member), AJ Spring (Staff Accountant), Jayne Frazier (Managing Member), Lori Moose (Administrative Assistant), Brandon Hall (Staff Accountant), Loaves & Fishes volunteer, Susanne Hicks (Staff Accountant) and Julie Clay – the event organizer with TIAA-CREF. We appreciate all of those who helped us with donations and especially the amazing staff and volunteers from Loaves and Fishes for the amazing work they do.