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Top 2 Issues That Will Affect Tax Payers This Tax Season

You don’t want to be surprised when it’s time for you to file your 2014 tax returns. There are 2 very important issues to keep in mind as individuals and businesses, passing of the Tax Increase Prevention Act and the Affordable Care Act requirements for reporting. Read more below to see how you could be affected.

1.) President Obama finally signed The Tax Increase Prevention Act on December 19, 2014.  This law extends, only through 2014, certain tax credits and deductions that were previously expired as of the end of 2013.

Provisions extended only through 2014 for individuals include:

  • The opportunity to take a deduction for state and local sales taxes rather than for state and local income taxes

    Obama

    Obama Signs The Tax Increase Prevention Act
    Photo Courtesy of blogspot.com

  • The right to deduct up to $4,000 for higher education expenses
  • A deduction for school teachers supplies up to $250
  • The exclusion of income due to the cancellation of debt on a principle residence – with a cap of $2 million
  • The deduction for mortgage insurance premiums
  • Energy-efficient home improvements tax credit
  • Tax free distributions from an IRA to a charitable organization if you are over 70 ½

Provisions extended only through 2014 for businesses include:

  • 15-year cost recovery of qualified leasehold, restaurant and retail improvements
  • An increase in the first year depreciation cap for autos and trucks by $8,000
  • Bonus first-year depreciation equal to 50% of the adjusted basis of qualified property
  • The right to elect to expense production costs of qualified TV and film productions.  It is limited to $15 million for each production

2.) New Affordable Care Act requirements for reporting health insurance coverage – or lack of it – on  income tax returns

  • Proof of coverage for many taxpayers probably will only require checking a box saying they have health insurance coverage from an employer that meets the law’s requirements, but others will have to verify their eligibility for the Premium Tax Credit or pay a penalty because they opted out of coverage.

Knowing how you will be affected is important when preparing your taxes.  Here at McMullan CPAs we can help make sense of it all for you! Contact us today so you can start keeping more of what you earn!

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