Q1 Tax Developments That May Affect Your Tax Situation
The first quarter of 2014 was full of important tax developments that could make a difference to you.
This is just an overview of the changes; for more information about how these developments could apply to your situation, please contact us.
Limited IRA rollovers Legally, one IRA rollover can be made in any 1-year period.
This applies to all of the IRAs owned by an individual.
The IRS did state that an IRA owner can keep transferring funds between IRA trustee as often as desired, as these transfers aren't considered rollovers.
Increased transfer time for small estates A surviving spouse can make a portability election, which means applying their deceased spouse's unused exclusion amount to their own transfers during life and at death.
The IRS has created an easier method for surviving spouses to elect portability.
Reinstatement of expired tax breaks A number of popular tax provisions expired at the end of 2013.
These included deductions for mortgage insurance premiums, qualified tuition, and state and local sales taxes.
Congress is currently working to reinstate these and other tax breaks and extend them through 2015.
Individual mandate for health insurance The new health care law mandates that most US citizens and legal residents must have a minimum level of health insurance.
If they don't, they face a penalty.
However, there are certain circumstances under which an individual can obtain relief from the penalty.
Further regulations have also been proposed to help people avoid the penalty.
Severance payments and Social Security The Supreme Court reversed a decision by the Sixth Circuit Court of Appeals to hold that most severance payments are subject to Social Security tax, as they fall under a broader definition of wages for tax purposes.
Luxury car depreciation limits Special rules apply to luxury automobiles that limit the available depreciation deductions that are typically available for certain vehicles.
The depreciation limit for passenger autos remains the same in 2014 as it did for 2013, but the limits have increased for light trucks and vans.
Understanding if and how tax developments affect your personal or business situation can be complicated, and a financial advisor can help you through the process.
There may be other tax changes that aren't listed here that could have an impact on your tax preparation for the year.
Also note that things can continue to change, so pay close attention to any ongoing developments throughout the year.
This is just an overview of the changes; for more information about how these developments could apply to your situation, please contact us.
Limited IRA rollovers Legally, one IRA rollover can be made in any 1-year period.
This applies to all of the IRAs owned by an individual.
The IRS did state that an IRA owner can keep transferring funds between IRA trustee as often as desired, as these transfers aren't considered rollovers.
Increased transfer time for small estates A surviving spouse can make a portability election, which means applying their deceased spouse's unused exclusion amount to their own transfers during life and at death.
The IRS has created an easier method for surviving spouses to elect portability.
Reinstatement of expired tax breaks A number of popular tax provisions expired at the end of 2013.
These included deductions for mortgage insurance premiums, qualified tuition, and state and local sales taxes.
Congress is currently working to reinstate these and other tax breaks and extend them through 2015.
Individual mandate for health insurance The new health care law mandates that most US citizens and legal residents must have a minimum level of health insurance.
If they don't, they face a penalty.
However, there are certain circumstances under which an individual can obtain relief from the penalty.
Further regulations have also been proposed to help people avoid the penalty.
Severance payments and Social Security The Supreme Court reversed a decision by the Sixth Circuit Court of Appeals to hold that most severance payments are subject to Social Security tax, as they fall under a broader definition of wages for tax purposes.
Luxury car depreciation limits Special rules apply to luxury automobiles that limit the available depreciation deductions that are typically available for certain vehicles.
The depreciation limit for passenger autos remains the same in 2014 as it did for 2013, but the limits have increased for light trucks and vans.
Understanding if and how tax developments affect your personal or business situation can be complicated, and a financial advisor can help you through the process.
There may be other tax changes that aren't listed here that could have an impact on your tax preparation for the year.
Also note that things can continue to change, so pay close attention to any ongoing developments throughout the year.
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