tax-aide federal tax law changes—2014 instructor workshop - 20141
TRANSCRIPT
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
Instructor Workshop - 2014 2
TAX-AIDE
Expired Provisions Continued
●Deduction for state and local general sales taxes
●Deduction for mortgage insurance premiums
●Nonbusiness energy property credit
Instructor Workshop - 2014 3
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
Instructor Workshop - 2014 4
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
Instructor Workshop - 2014 5
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
Instructor Workshop - 2014 6
TAX-AIDE
Alternate Minimum Tax
●Raised to $50,600 (single)
●$78,750 (MFJ)
Instructor Workshop - 2014 7
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)
Instructor Workshop - 2014 8
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
Instructor Workshop - 2014 9
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
Instructor Workshop - 2014 10
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
Instructor Workshop - 2014 11
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%
Instructor Workshop - 2014 12
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
Instructor Workshop - 2014 13
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.
Instructor Workshop - 2014 14
TAX-AIDE
Indian Nations that recognize Same Sex Marriage
Instructor Workshop - 2014 15
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.
Instructor Workshop - 2014 16
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
NTTC Training – TY 2014 18
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
NTTC Training – TY 2014 19
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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
NTTC Training – TY 2014 20
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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
NTTC Training – TY 2014 21
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
NTTC Training – TY 2014 22
TAX-AIDENTTC Training – TY 2014 23
TAX-AIDE
Form 14039
NTTC Training – TY 2014 24
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
NTTC Training – TY 2014 25
TAX-AIDE
QUESTIONS/COMMENTS?
Instructor Workshop - 2014 26