Important Tax Updates for 2014
With the New Year right around the corner, we would like to keep you informed of some important tax updates for 2014. Tax laws are constantly changing, so feel free to contact us at any time you have questions.
Personal and dependent exemptions are increased to $3,950 for 2014
Standard deductions - are increased for 2014 to:
Single or Married filing separately: $6,200
Head of Household: $9,100
Married Filing Jointly or Qualifying widow(er) with dependent child: $12,400
The maximum earned income tax credit (EITC) for 2014 is increased to $6,143
The maximum income limit for the EITC for 2014 is increased to $52,427
The foreign earned income deduction for 2014 is increased to $99,200
The lifetime learning credit begins to phase out for 2014 at $108,000 in adjusted gross income for joint filers, $54,000 for single and head of household filers
Annual deductible amounts for Health Savings Accounts for families and individuals are $6,550 and $3,300 for 2014, respectively, and $6,650 and $3,350 for 2015, respectively
The estate and gift tax exclusion is increased to $5.36 million
The threshold for unreimbursed medical expenses increases from 7.5 percent to 10 percent of adjusted gross income (AGI) for most taxpayers. There is a temporary exemption from Jan. 1, 2013 to Dec. 31, 2016 for individuals age 65 and older and their spouses. If you or your spouse is 65 years or older or turned 65 during the tax year you are allowed to deduct unreimbursed medical care expenses that exceed 7.5% of your adjusted gross income. The threshold remains at 7.5% of AGI for those taxpayers until Dec. 31, 2016.
Business special depreciation tax breaks - It appears that the business depreciation tax breaks that expired at the end of 2013 were renewed for at least another year. The Senate recently passed a bill to retroactively extend more than 50 expired tax provisions through 2014. Among the highlights of the bill: First-year bonus depreciation and the increased Sec. 179 expensing limits are extended. In a prior ECS newsletter found here, we discussed that businesses that enjoyed the tax breaks over the last several years would see lower depreciation deductions and higher tax liabilities when the provisions inevitably expire. As you enjoy the benefit of these deductions, it is still a good idea to be aware of the potential long-term consequences of these accelerated deductions.
New Years Requests from our Tax Professionals
The onset of the New Year generally means two things for us at ECS: hopeful New Year’s resolutions and the onset of tax season. The holiday season has been an exciting time for ECS due to our merger and ongoing staff and client growth. With all of our recent changes, our commitment to excellence is unchanging and we will continue our commitment of providing close, personal attention to our clients.
With that being said, our tax professionals have three simple requests that will help us better serve you during the upcoming busy season:
Aim to bring/send your tax documents in early!
We understand how irritating it can be when you have 90% of your tax information ready and you’re still waiting on those delayed K-1’s and brokerage statements. Instead of holding off in the hopes of providing a complete package, feel free to pass on your “almost complete” documentation. Just write us a quick note to let us know what’s missing. This will allow us time to draft your return and clear up any open issues early on in the tax season. Adding the final pieces of tax information at the last minute will result in a quicker turnaround than having to prepare the entire return at a later date.
Consider filing electronically if you aren’t already!
Whatever your reason for not electronically filing in the past, we urge you to reassess. E-filing is faster, safer, more ecologically responsible and generally more convenient than paper filing. Furthermore, e-filing means the IRS doesn’t have to re-type your tax return data into its system, resulting in a lower chance of the IRS making a mistake when processing your return. If you are expecting a refund, e-filing also results in quicker refunds. The biggest benefit of electronic filing is that we receive confirmation that the IRS has received your tax return on a timely basis and has started processing it. This confirmation should offer you some peace of mind. Also bear in mind that we only e-file once you give us authorization to do so; you are able to review your return prior to us e-filing, so you aren’t giving up control of the filing by choosing to e-file. Please contact us or make a note in your organizer if you would like us to start electronic filing your tax returns for you.
Make use of the organizer package.
If you were married or divorced, had a baby, changed jobs or retired, sold your home, or went through any other significant life change event(s) in 2014, let us know via the organizer we mail you each year in January. Because the organizer contains your information from the prior tax year, it can serve as a guide for gathering this year’s tax data, and a safeguard to assure yourself that you have accounted for all of your relevant tax documents. If any accounts were closed in the prior year, you can note that as well. The organizer is a great tool for you to stay on top of your taxes and for us to detect anything we may have missed during our correspondence with you.
If you have any questions or concerns regarding the topics discussed above, please feel free to contact us.
We are all very fortunate to have a great ECS family to work with, but we wouldn’t be here if it wasn’t for our clients. We are thankful for each one of you and wish you a safe and happy New Year!
2015 Tax Due Dates:
January 15th –
Final 2014 estimated tax payments for Individuals due
January 31st –
1099 forms due to recipients
W-2 forms due to employees
4th quarter and year-end 2014 employer payroll tax returns due
February 28th –
Forms 1096 & 1099 forms due to government
Forms W-3 and Copy A of W-2’s due to government
Monthly Illinois wage report for January due (employers with 25 or more employees)
This email disclaimer is subject to IRS Circular 230 as mandated by federal law. Unless expressly stated otherwise above, nothing contained in, forwarded with, or attached to this email was intended or written by ECS Financial Services, Inc. to be used, and cannot be used, by any person for the purpose of (1) avoiding any penalties that may be imposed under the Internal Revenue Code, or (2) promoting, marketing or recommending any federal tax transaction or matter addressed herein.