TAX-AIDE Federal Tax Law Changes—2014 Instructor Workshop - 20141.

TAX-AIDE

TAX-AIDE

Federal Tax Law Changes—2014

Instructor Workshop - 2014 1

TAX-AIDE

Expired Provisions (at least for now)

●Discharge of indebtedness on principle residence excluded from gross income

●Qualified Charitable Distribution

●Adjustment up to $250 for teacher classroom expenses

●Deduction for qualified tuition and related expenses


TAX-AIDE

Expired Provisions Continued

●Deduction for state and local general sales taxes

●Deduction for mortgage insurance premiums

●Nonbusiness energy property credit


TAX-AIDE

Tax Rates

●Current tax rates retained plus a new tax rate of 39.6% for taxable income over $400,000 (single) & $450,000 (MFJ)

●2% reduction in Social Security payroll tax rates expire. Withholding amounts adjusted accordingly


TAX-AIDE

Capital Gains Taxes

●0% LTCG rate for those in 10% and 15% tax brackets

●15% LTCG rate for those in 25% to 35% tax brackets

●20% LTCG rate for those in 39.6% tax bracket


TAX-AIDE

Dividend Taxes

●0% for those in 10% and 15% brackets

●15% for those in 25% through 35% brackets

●20% for those in 39.6% bracket

●Nonqualified dividends will continue to be taxed at ordinary income tax rates


TAX-AIDE

Alternate Minimum Tax

●Raised to $50,600 (single)

●$78,750 (MFJ)


TAX-AIDE

Standard Deduction/Exemption Increases

●$12,400 (from $12,200) – MFJ or QW

●$9,100 (from $8,950) – HH

●$6,200 (from $6,100) – Single or MFS

●Exemptions increased to $3,950 (from $3,900)


TAX-AIDE

EIC Maximum Credits/Range Change

● $6,143 (was $6,044) – three or more qualifying children

● $5,460 (was $5,372)– two qualifying children

● $3,305 (was $3,250)– one qualifying child

● $497 – (was $487) no qualifying child

● $46,997 ($52,427 MFJ) 3 qualifying children

● $43,756 ($49,186 MFJ) 2 qualifying children

● $38,511 ($43,941 MFJ) 1 qualifying child

● $14,590 ($20,020 MFJ) no qualifying child


TAX-AIDE

Standard Mileage Rate

●56 cents (was 56.6) per mile – business miles

●23.5 (was 24) cents per mile – medical miles

●14 cents per mile (no change) – charitable miles


TAX-AIDE

Deductible Long-Term Care Premium Limits

●Qualified long-term care premiums includible as medical expense on Sch A $370 (was $360) – Age 40 or under $680 (was $680) – Age 41 to 50 $1,400 (was $1,360) – Age 51 to 60 $3,720 (was $3,640)– Age 61 to 70 $4,660 (was $4,550) – Age 71 and over


TAX-AIDE

Unreimbursed Medical and Dental Expense Limitation

●NEW LAST YEAR – Taxpayers can deduct only the amount of unreimbursed medical and dental expenses that exceeds 10% of AGI.

● If 65 or older the threshold is 7.5%


TAX-AIDE

Defense of Marriage Act (DOMA)

●AARP Tax-Aide will be required to prepare MFJ Federal tax returns for same sex married couples married in a state that recognizes same sex marriage.

●Ask in what state they were married


TAX-AIDE

States that recognize Same Sex Marriage

● Thirty-five states and the District of Columbia have legalized gay marriage: Alaska, Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Maine, Maryland, Massachusetts, Minnesota, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin and Wyoming.


TAX-AIDE

Indian Nations that recognize Same Sex Marriage


1 Blackfeet Tribe2 Cheyenne and Arapaho Tribes3 Confederated Tribes of the Colville Reservation4 Coquille Tribe5 Fort McDermitt Paiute and Shoshone Tribes of the Fort McDermitt Indian Reservation6 Fort McDowell Yavapai Nation7 Iipay Nation of Santa Ysabel8 Leech Lake Band of Ojibwe9 Little Traverse Bay Bands of Odawa Indians10 Mashantucket Pequot11 Pokagon Band of Potawatomi Indians12 The Puyallup Tribe of Indians13 Salt River Pima-Maricopa Indian Community14 Suquamish Tribe15 Wind River Indian Reservation

TAX-AIDE

Defense Of Marriage Act - AZ

●AZ will recognize same sex marriages beginning in 2014.

●Prior year same sex marriage returns will not be prepared.


TAX-AIDE

Identity Theft

● Someone uses another's information, such as name, identifying number, or credit card number, without permission, to commit fraud or other crimes.

●Victims of identity theft are victimized mostly through no fault of their own

NTTC Training – TY 2014 17

TAX-AIDE

Identity Theft

● IRS sends notices to taxpayers identified as victims (or potential victims)

●Notice provides Identity Protection PIN victim needs when filing his or her 2014 tax return


Pub 4491, pg 8

TAX-AIDE

Identity Theft

●Ask taxpayer if s/he contacted IRS regarding identity theft or if IRS sent notice of potential identity theft


TAX-AIDE

Identity Theft (cont)

●Enter IP PIN on TaxWise Main Information Sheet in Identity Protection PIN section near bottom

Note: e-file return will be rejected if IRS issued PIN not included


TAX-AIDE

Identity Theft (cont)

● If taxpayer received IP PIN but lost it, have taxpayer call ID Theft Toll-free Hotline: 800-908-4490

● If hotline provides new IP PIN – e-file

● If not – create paper return and advise taxpayer to follow hotline instructions


TAX-AIDE

Identity Theft

● If e-file rejected with indication that tax return for primary or secondary social security numbers has already been filed, give taxpayer:1. Paper copy of return to mail

2. Letter with instructions

3. Form 14039 – Identity Theft Affidavit


TAX-AIDENTTC Training – TY 2014 23

TAX-AIDE

Form 14039


TAX-AIDE

Recommendation…

E-file everyone for whom return is prepared● From taxpayer’s perspective

Identify identity theft Potentially prevent identity theft Provide documentation of tax status

● From IRS perspective Incremental “cost” of e-file is low Cost of dealing with identity theft is high

● From AARP perspective Better tracks activity Creates IRS record of return if questions arise later


TAX-AIDE

QUESTIONS/COMMENTS?


TAX-AIDE Federal Tax Law Changes—2014 Instructor Workshop - 20141.

Documents

Transcript of TAX-AIDE Federal Tax Law Changes—2014 Instructor Workshop - 20141.