What’s New in Tax & Accounting

TAX EXTENDERS JUST RENEWED
These tax benefits are only renewed for 2014, so 2015 is up in the air again. And return filings will again be delayed due to congress’s last minute action.

The tax benefits only renewed for 2014 are:

• Mortgage PMI (private mortgage insurance) deduction
• IRA direct contributions o charities
• Section 179 depreciation limits
• Bonus depreciation
• Non-taxable forgiveness of debt on the foreclosure of a personal residence
• Deducting sales tax if it exceeds state income tax
• Energy credit for home improvements

There is only a new concept called an ABLE account with tax benefits for disabled individuals to pay for disability related expenses–even if the individual is on Medicaid. We hope these accounts will be available next year.

NET INVESTMENT INCOME (NII) TAX AND ADDITIONAL MEDICARE TAX
These additional taxes are with us again in 2014 for tax payers with higher income levels.
One idea to minimize NII taxes is

• Tax Exempt municipal bond interest not subject to the NII tax. But make sure the bonds aren’t subject to Alternative Minimum Tax. So talk to your investment advisor to see if switching some of your portfolio is a good gift for you.

GIFTS
You can make a gift to an individual totaling $14,000 for 2014. Tuition and medical expenses paid directly (not paid to the individual) are not included in the $14,000. If you are married, your spouse can also join in a gift, doubling the maximum gift to $28,000.

ESTATE PLANNING
Tax law in this area has changed significantly over the years. If your wills and trusts have not been updated in a while, it is time to have your attorney take another look.

SOCIAL SECURITY BENEFITS–YOU COULD HAVE OPTIONS
If you or your spouse are nearing retirement, you may want to check with your local social security office to see if it pays to claim an earlier benefit under one spouse and then switch at a later age. For example, a wife could claim her benefit at age 62 (watch the earnings limits) and switch to benefits under her husband at a later age. Your social security office can show you your best options; an office visit is advisable, and if you were divorced after a marriage of atleast 10 years, check to see options using your ex’s information.

HAVE ANY TAX QUESTIONS?
Please call our office at (847) 316 – 1040 or email LFormanCPA@aol.com