Things to Know about Taxes in 2014

Tax Deductions_Bryant & AssociatesThere are a lot of changes taking place during tax season this year, and our firm of CPAs and small business accounting professionals at Bryant & Associates, P.C. in Lincoln, Nebraska wants you to be aware of changes that may affect you. Nothing is worse than having something surprise you come tax time, whether it’s an extra charge or realizing that the deduction you were depending on is no longer available. So in the interest of keeping you apprised of recent developments this tax year, we at Bryant & Associates have compiled this list of changes for you to keep in mind as you wade into this year’s tax season and beyond.

1. Taxpayers with higher incomes are going to pay more.

This is a simple fact and you may as well brace yourselves for it now, as this is a trend that’s likely to continue into the foreseeable future. After much uncertainty in the United States Congress, the Bush-era tax cuts have finally breathed their last, sending the top tax rate for taxpayers to 39.6%. As a country we haven’t had to deal with taxes that high in 15 years, so for those taxpayers making $400,000 individually or $450,000 married filing jointly, this could come as a shock if they aren’t prepared for it.

2. Even lower income taxpayers could end up paying more.

If you’re affected by the Affordable Care Act, you could end up paying a bundle if you’re without health insurance in 2014 and don’t meet certain exemptions. Whether you call it a penalty or a tax, or, as the IRS likes to call it, a “shared responsibility payment,” if you don’t have health insurance in 2014 be prepared to pay either 1% of your taxable income or a flat fee of $95 per uninsured adult per month, whichever is higher. If you have children who are also uninsured, you’ll also have to fork over $47.50 per child per month (up to $285 per family).

This fee for taxpayers without health insurance is due when you file your 2014 tax return in April 2015, and the fee increases every year you go uninsured—the rate increases to $325 per month in 2015 and $695 in 2016.

3. 55 tax breaks are no longer available after December 31, 2013.

The expiration of these tax breaks affects a wide range of taxpayers from all walks of life and different levels of income. This is a shortened breakdown of some of the tax breaks that have disappeared as of the start of 2014:

  • Teachers can no longer claim a tax deduction of up to $250 of their out-of-pocket costs for supplies used in the classroom. As this was an above the line deduction, teachers didn’t have to itemize their expenses in order to claim it.
  • Another above the line deduction to bite the dust affects students, as they’ll no longer be able to deduct up to $4000 for tuition and fees associated with their education.
  • Homeowners who are underwater on their mortgages also lost a very helpful tax break in the form of the Mortgage Forgiveness Debt Relief Act, which when signed into law in 2007 stated that forgiven debt on a private residence that resulted from a renegotiated mortgage, foreclosure or short sale could be excluded from one’s reportable income. This is no longer the case and that forgiven debt is now taxable as income.
  • Many tax credits for energy-efficient home improvements also got the axe at the end of 2013. A $500 credit for eligible insulation, window, door, and roof installation disappeared. There’s also no longer a credit available for installing energy-efficient water heaters, furnaces, and air conditioning systems.

Contact Bryant & Associates, P.C. Today at (402) 423-0404!

Our firm of CPA professionals and accounting specialists are focused on all aspects of small business accounting, from bookkeeping to payroll to tax services, giving our clients the freedom they need to make their businesses grow. Give Bryant & Associates a call at (402) 423-0404 today to get started!

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