Embed Size (px)
Citation preview
Strategies to Save On Your
2014 Taxes
December 3, 2014
- 2 -
SKODA MINOTTI TEAM
Michael Minotti, CPA
PartnerJenna Staton, EA
Manager
- 3 -
• Business Tax Update
Business Tax Changes
Repair Regulations For Business Owners
Affordable Care Act Tax Provisions
• Personal Tax Update
Personal Tax Changes
Affordable Care Act Tax Provisions
IRS Scams/Tax Return Fraud
• State and Local Tax Update
TODAY’S AGENDA
Business Tax Update
- 5 -
Provisions Expired
• Various temporary tax provisions expired December 31, 2013
Research Credit
Work Opportunity Credit
Differential Wage Credit for Activated Military Reservists
Enhanced deduction for charitable contributions of food inventory
Tax incentives for empowerment zones
BUSINESS TAX CHANGES
- 6 -
Provisions Expired
• Continued provisions expired December 31, 2013
Low-income tax credits for non-federally subsidized new
buildings
Low-Income housing tax credit treatment of military housing
allowances
Adjusted-basis reduction of stock after S corporation charitable
deduction of property
Recognition period for S corporation built in capital gains
100% exclusion of small business stock sale or exchange
BUSINESS TAX CHANGES
- 7 -
REENACTED??
WHICH WILL BE
IT’S ANYONE’S GUESS!
- 8 -
MITIGATE BUSINESS TAX?
WHAT CAN I DO TO
• Traditional timing of income/deductions to reduce
overall income
• Take advantage of $25,000 Section 179 expensing
election
• Domestic Production Activities Deduction
• New Tangible Property Regulations (Repair
Regulations)
- 9 -
REPAIR REGULATIONS
BUSINESS TAX
Final Regulations on Repair vs. Capitalization Standards
What to Look For What You Will Find
Repairs & Maintenance De Minimus
Capitalization Routine Safe Harbor
Building & Equipment Small Taxpayer Safe Harbor
Materials & Supplies Betterment/Restoration
- 10 -
AFFORDABLE CARE ACT
BUSINESS TAX
Employer shared responsibility requirements take effect January 1, 2015
• If I have 100 FTEs, do I provide affordable, minimum coverage to the full-time employees and their dependents?
• Focus on two separate elements: What is affordable coverage?
What is minimum coverage?
- 11 -
COVERAGE?
WHAT IF I DON’T OFFER
If an employer:
• Fails to offer a full-time employee (or one of their
dependents) coverage; and,
• The employee receives a subsidy (either a tax credit or
cost-sharing reduction) through the exchange for
purchasing health insurance
• The employer may be liable for a $2,000 penalty per year
for the total number of full-time employees (not counting
the first 30 employees)
- 12 -
IS UNAFFORDABLE?
WHAT IF THE COVERAGE
• If an employer offers its full-time employees (and
dependents) coverage but the coverage is either:
1. Unaffordable
2. Does not provide minimum coverage
• The employer will be liable for a penalty of $3,000 per
year, times the number of full-time employees who
receive insurance through the exchange and receive a
subsidy
Personal Tax Update
- 14 -
PERSONAL TAX CHANGES
Popular Tax Provisions Expired December 31, 2013
• $250 above-the-line annual deduction for professional educator’s qualified unreimbursed expenses
• Exclusion from gross income for discharges of qualified principal residence indebtedness
• Itemized deduction for mortgage insurance premiums
• Election to claim deduction for state an local sales tax in lieu of state and local income taxes
• Exclusion from gross income of charitable distributions of IRA RMD for individuals aged 70 ½ or older
• Residential energy property credit
- 15 -
REENACTED?
WHICH WILL BE
IT’S ANYONE’S GUESS!
- 16 -
MITIGATE PERSONAL TAX?
WHAT CAN I DO TO
• Accelerate itemized deductions such as real estate
taxes, miscellaneous itemized deductions and state
and local tax payments if you’re not subject to
Alternative Minimum Tax
• Make year-end charitable gifts of cash and non-cash
• Consider any life cycle events such as change in
marital status, changes in medical expenses,
retirement, or a dependent in college
- 17 -
INVESTMENT INCOME TAX
MEDICARE SURTAX
• Patient Protection and Affordable Care Act –
Two Parts
0.9% increased Medicare tax due on wages and
self-employment earnings
3.8% surtax on at least a portion of investment
income such as capital gains, dividends and net
rental income
• Threshold Amounts
Single taxpayers — $200,000
Married taxpayers — $250,000
- 18 -
AFFORDABLE CARE ACT
PERSONAL TAX CHANGES
• Effective January 1, 2014 the Affordable Care Act requires individuals to carry minimum health coverage
• Fines for non-coverage (shared responsibility payment) will be calculated on the 2014 Form 1040
• Taxpayers that obtained health care through the Marketplace may be eligible for premium assistance – also calculated on the taxpayer’s 2014 Form 1040
- 19 -
AFFORDABLE CARE ACT
PERSONAL TAX CHANGES
Shared Responsibility Payment
• 2014 = $95 per person per year or 1% of your Income
• 2015 = $325 per person per year or 2% of your Income
• In addition:
The penalty is based on modified adjusted gross income
(modified AGI)
The total penalty for the taxable year cannot exceed the national
average of the annual premiums of a bronze-level health
insurance plan offered through the health insurance
marketplaces.
- 20 -
AFFORDABLE CARE ACT
PERSONAL TAX CHANGES
Shared Responsibility Payment
• The maximum penalty per family is capped at no more
than 300% of the minimum penalty
2014 = Maximum $95 x 3 = $285
2015 = Maximum $325 x 3 = $975
• Children under 18 are assessed at 50% of the
minimum penalty
- 21 -
AFFORDABLE CARE ACT
PERSONAL TAX CHANGES
Shared Responsibility Payment
• The penalty is pro-rated for the number of months you
are without health insurance, though there is no penalty
for a single gap in coverage of less than 3 months in
a year
• Health insurance providers will provide proof of coverage
for their customers so as long as you have health
insurance you don’t have to worry about the details
- 22 -
AFFORDABLE CARE ACT
PERSONAL TAX CHANGES
Eligibility for Premium
Assistance
• Buy health insurance through
the Marketplace;
• Are ineligible for coverage
through an employer or
government plan;
• Are within certain income limits
- 23 -
AFFORDABLE CARE ACT
PERSONAL TAX CHANGES
Eligibility for Premium Assistance
• Do not file a Married Filing Separately tax return (unless
you meet the criteria in section 1.36B-2T(b)(2) of the
Temporary Income Tax Regulations, which allows certain
victims of domestic abuse and spousal abandonment to
claim the premium tax credit using the Married Filing
Separately filing status); and
• Cannot be claimed as a dependent by another person
- 24 -
IRS IMPERSONATORS
TELEPHONE SCAMS BY
• Scammers use fake names and
IRS badge numbers
They generally use common
names and surnames to identify
themselves
• Scammers may be able to
recite the last four digits of a
victim’s Social Security number
• Scammers spoof the IRS toll-
free number on caller ID to
make it appear that it’s the IRS
calling
- 25 -
IRS IMPERSONATORS
TELEPHONE SCAMS BY
• Scammers sometimes send bogus IRS emails to some
victims to support their bogus calls
• Victims hear background noise of other calls being
conducted to mimic a call site
• After threatening victims with jail time or driver’s license
revocation, scammers hang up and others soon call back
pretending to be from the local police or DMV, and the
caller ID supports their claim
- 26 -
IRS IMPERSONATORS
TELEPHONE SCAMS BY
Things to Know – The IRS:
• Never asks for credit card, debit card or prepaid card information over the telephone
• Never insists that taxpayers use a specific payment method to pay tax obligations
• Never requests immediate payment over the telephone and will not take enforcement action immediately following a phone conversation. Taxpayers usually receive prior notification of IRS enforcement action involving IRS tax liens or levies
- 27 -
IRS IMPERSONATORS
TELEPHONE SCAMS BY
What You Should Do…
• If you know you owe taxes or you think you might owe taxes, call the IRS at 1-800-829-1040. The IRS employees at that line can help you with a payment issue, if there really is such an issue
• If you know you don’t owe taxes or have no reason to think that you owe any taxes (for example, you’ve never received a bill or the caller made some bogus threats as described above), then report the incident to TIGTA at 1-800-366-4484
• You can file a complaint using the FTC Complaint Assistant; choose “Other” and then “Imposter Scams.” If the complaint involves someone impersonating the IRS, include the words “IRS Telephone Scam” in the notes
- 28 -
THEFT RISK
MINIMIZING IDENTITY
1. When giving out your information (SS #, DOB) ask how it will be used and if it will be shared. Will it be publicly available?
2. Pay immediate attention to your bank and credit card statements
3. Watch your mail! Incoming and outgoing
4. Place passwords on credit/debit cards and bank accounts. Avoid mother’s maiden name, your date of birth, last 4 digits of your SS number, phone number, and house address
5. Don’t carry unnecessary credit cards on your person
- 29 -
THEFT RISK
MINIMIZING IDENTITY
6. Never give out personal information over the phone, thru the mail or on line unless you have initiated the request to a number you know
7. Destroy personal information when it is discarded –shredders are very useful
8. Safe keeping of information inside your house
9. Do not carry your social security card
10. Obtain a copy of your credit report from each of the three reporting bureaus EVERY YEAR!
11. Keep social media disclosures in perspective
- 30 -
NOW WHAT?
I AM A VICTIM
• Place a “Fraud Alert” on your credit reports by calling any one of the three nationwide credit reporting companies: Equifax: 1-800-525-6285
Experian: 1-888-397-3742
TransUnion: 1-800-680-7289
• Immediately secure and review all three of your credit reports carefully, looking for fraudulent or unauthorized inquiries or activity
• Close any accounts that have been tampered with or opened fraudulently
• File a police report in the city where you reside
• File required affidavits with tax agencies
- 31 -
NOW WHAT?
I AM A VICTIM
• Is a credit freeze right for you?
• Consider credit monitoring
• Consider closing and then opening new bank accounts and/or credit card accounts (depending on the ID Theft)
• Discuss increased bank monitoring on your checking accounts
• File an Identity Theft Victims Complaint and Affidavit with the Federal Trade Commission
• Document everything
• Never discuss your identity theft case with anyone wherein you did not initiate the telephone call
State & Local Tax Update
- 33 -
• Ohio Individual Income Tax
• Ohio Small Business Deduction
• InvestOhio
• Ohio Commercial Activity Tax
• Ohio Refund Program
STATE AND LOCAL UPDATE
- 34 -
INCOME TAX
OHIO INDIVIDUAL
• 2014 Mid-Biennium Budget Bill
Additional individual rate reduction. By 2016 the top individual
income tax rate will be less than 5%
Ohio’s Earned Income Tax Credit was doubled from 5% to 10% of
the federal tax credit
The Ohio personal exemption was increased from $1,700 to
$2,200 for families earning less than $40,000 per year
The Ohio personal exemption for families earning between
$40,000 and $80,000 has been increased from $1,700 to $1,950
- 35 -
BUSINESS DEDUCTION
OHIO SMALL
• H.B. 483 also made changes to Ohio’s Small Business
Deduction
For 2014 this tax deduction was changed to 75% of the first
$250,000 of small business income
This increase is only for 2014
For 2014 the deduction will be $187,500 for individuals with a
filing status of married filing jointly or single.
The deduction for married filing separately the deduction will be
$93,750 ($125,000 x .75%)
- 36 -
INVESTOHIO
• InvestOhio is still available for
investors in qualified businesses
• The credit is 10% of what is invested
in a qualifying business to secure an
equity investment in the business
The investment must be held for
two years
• The state’s biennium will be ending
6/30/2015 so applications need to be
submitted by this date
• Should be another round of funding
beginning 7/1/2015
- 37 -
ACTIVITY TAX
COMMERCIAL
• The tax has been in place since 7/1/2005 now is the time
to revisit the receipts that are being reported to Ohio for
the Commercial Activity Tax
• Tax Rate = .0026%
• The minimum fee was changed for the Commercial
Activity Tax for tax periods beginning 1/1/2014 the
minimum fee is based on the reported gross receipts for
the prior year
- 38 -
ACTIVITY TAX
COMMERCIAL
The New Minimums
Taxable Gross Receipts Annual Minimum
$1 million or less $150
More than $1mm but less than
or equal to $2mm$800
More than $2mm but less than
or equal to $4mm$2,100
More than $4mm $2,600
- 39 -
OHIO REFUND PROGRAM
• Am Sub S.B. 263 passed during 2014 authorizes the
State of Ohio to quickly resolve business tax
overpayments
• The Ohio Department of Taxation will now proactively
refund businesses any overpayments that are discovered
• Ohio Department of Taxation has identified almost $34
million in overpaid taxes and have refunded these dollars
plus interest to taxpayers – these refunds have totaled
about $29 million
- 40 -
QUESTIONS?
Michael Minotti, CPAPartner
Jenna Staton, EA Manager
