Changes for the 2014 Tax Filing Season

2014 Tax ChangesDuring the past three months, there have been several huge changes in the tax rules that may affect you. Call us for more information about these developments and how you can best make them work for you.

  1. Delayed start date for 2014 tax filing season. The IRS will not begin processing tax returns or issuing refunds until January 31, 2014. This is 10 days later than originally planned and is due to the government shutdown in the fall.
  2. Guidance on the new 3.8% surtax on investment income. This new surtax will apply if modified adjusted gross income is over $200,000 for individual filers, $250,000 for married filers filing jointly, and $125,000 for married filers filing separately. The IRS has also released additional information on how to calculate the tax.
  3. Guidance on the new additional Medicare tax. Beginning with the 2013 tax year, taxpayers making over $200,000 per year ($250,000 if married, $125,000 if married, but filing separately), will pay an additional 0.9% tax on income over $200,000. For self-employment income in excess of the same thresholds, there is also an additional 0.9% self-employment tax.
  4. “Use-it-or-lose-it” rule relaxed for health FSAs. Plan sponsors can now allow, but is not required to allow, consumers to carry over up to $500 per year. Previously, any unused funds were forfeited.
  5. Standard mileage rates reduced. The standard mileage allowance for business use of personal vehicles has been reduced from $0.565 to $0.56 per mile. The rate for transportation to medical care and moving expenses also fell. This only affects travel after January 1, 2014.
  6. Bankruptcy protection for inherited IRAs. The Supreme Court will soon decide whether inherited IRAs are protected during bankruptcy. Lower courts have been divided over whether they are an exempt asset.