Finances, Investing in Real Estate

2014 Tax Planning Tips

 

IRS Tax Filing Deadline is right around the corner – Tuesday, April 15th, 2014! Here are a few quick tips to help you get the filling process started!

  • Get ready to wait early in the year. Due to the federal government shut down last October, the IRS says Jan. 31, 2014 is the earliest it will be ready to process individual tax returns, possibly Feb. 4, 2014 in order for the agency to complete system updates and tests, which were interrupted by the shutdown.
  • Get ready to wait later in the year. Every year or so, some temporary tax provisions are renewed by Congress. In recent years, lawmakers have let the laws expire and then renewed them retroactively. Expect a replay in 2014. 55 tax provisions expire on Dec. 31, 2013. This doesn’t affect your 2013 tax return, but tax planning for 2014 will be a different story.
  • Watch for added taxes if you’re wealthy. In addition to paying a top ordinary tax rate of 39.6% if, as a single filer, your taxable income is more than $400,000 ($450,000 for married couples filing jointly), you could face added taxes.
  • Sign up for medical insurance. If you don’t buy an insurance plan, you could face a penalty. The charge for 2014 is either 1% of your yearly household income or $95 per uninsured adult and $47.50 per child, up to $285 for a family. You pay whichever amount is higher when you file your 2014 tax return in 2015.
  • File jointly if you’re a same-sex married couple. Married same-sex couples now have the same federal tax filing responsibilities as heterosexual couples. The IRS has instructed same-sex couples to file jointly or as a married couple filing separately even if the state where they live does not recognize their marriage.
  • Claim the simplified home office deduction. The IRs is now offering a simplified home office deduction. The new optional deduction is $5 for each square foot of home office space, up to a maximum of 300 square feet.
  • Keep an eye on IRS troubles. The IRS is proposing new regulations for groups seeking 501(c)(4) nonprofit status. The IRS is proposing limits on social welfare groups spending on political campaign-related activities.
  • Pay attention to tax preparer regulation. The IRS effort to regulate professional tax preparers will continue in 2014. A final decision on tax preparer standards could come in 2014, affecting taxpayers seeking professional help in fulfilling their tax responsibilities.
  • Watch out for tax reform. The last overhaul of the federal tax code was in 1986. Rep. Dave Camp, R-Mich., and Sen. Max Baucus, are insistent that there be some tax reform before they leave the chairmanships of, respectively, the House Ways and Means and Senate Finance committees.
  • Take advantage of inflation tax adjustments. Inflation had a nominal effect on around 40 tax provisions for 2014. Income brackets were widened a tad. Most people claim the standard deduction, and those amounts for each filing status in 2014 were increase slightly, as was the personal exemption amount.
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