BREAKING: IRS Announces Start Dates for 2015 Filing Season

Today, the IRS announced that the start of the 2015 filing season will be as follows:

Individual returns (1040): Tuesday, January 20, 2015

Business returns (Corporate, S-Corp and Partnership): Friday, January 9, 2015

See the Tax Season Opens As Planned Following Extenders Legislation news release on the IRS website for more information.

Federal Tax Provisions Extended for One Year

On December 16, 2014, Congress finished passing legislation that extended, for one year, virtually all of the provisions that had expired at the end of 2013. The bill HR 5771 will become law once the President signs it.

Here is a list of some of the provisions that are now applicable for Tax Year 2014 returns:

• $250 Educator Expense Deduction – Form 1040, line 23
• Tuition and Fees Deduction – Form 8917
• Itemized Deduction for Sales Tax – Schedule A
• 50% Bonus Depreciation
• Exclusion of gain from income for foreclosed home mortgage debt (Form 982)
• Section 179 Deduction:
• Maximum Amount: $200,000
• Maximum Cost: $2,000,000
• Qualified Real property category which includes leasehold improvements, restaurant property and retail property with a maximum deduction of $250,000
• Qualified Real Property
• 15 year straight line depreciation allowed for qualified leasehold restaurant and retail improvements
• Tax-free distributions from IRAs for charitable purposes
• Nonbusiness energy property tax credit on Form 5695
• Contributions of capital gain real property made for conservation purposes (50% limitation applies instead of 30% limitation)

For a complete listing of the individual and business provisions that were extended for 2014 only, as well as changes related to the Affordable Care Act and other reminders, see the Things to Know for the Current Tax Year page on the Crosslink Tax website.

New IRS Direct Deposit Limits

Beginning with the upcoming filing season the IRS will be limiting the number of refunds that may be electronically deposited into a single financial account or pre-paid debit card to three.

Any subsequent deposits will be automatically converted to a paper refund and mailed to the taxpayer at the address shown on the federal return.

If this occurs, the taxpayer will be sent a notice informing them the reason why the refund will not be direct deposited and that they will receive a paper check in approximately four weeks.

This new procedure has been instituted as part of the IRS’ continuing efforts to combat fraud and identity theft.

To read more about this new limitation on direct deposits see the Direct Deposit Limits page on the IRS website.

IRS Update: Additional Tax (Penalty) for Not Having Health Insurance for 2014

The following is a reminder of how the individual shared responsibility payment (penalty or additional tax) for not having health insurance for all or part of the year will be calculated for 2014, as well as how much it increases in 2015. Read More

The individual shared responsibility payment (penalty) will not apply to an individual who qualifies for an exemption that they either obtained from the Marketplace or requested when filing their 2014 federal return.

It is important to remember that the penalty, as explained below, is based on the individual not having insurance for the entire year. If an individual did not have insurance for only part of the year, then the penalty would be pro-rated based on the number of months they did not have health insurance.

The individual shared responsibility payment for 2014 is the greater of:

• 1% of their modified adjusted gross income that exceeds their personal exemption (doubled for married couples filing jointly), plus the standard deduction for their filing status.

Modified Adjusted Gross Income is Adjusted Gross Income plus:

• Tax exempt interest
• Portion of social security income not included in income
• Foreign earned income and the housing cost of individuals who live abroad

Therefore, the penalty begins to be calculated once the modified adjusted gross income exceeds:

• $10,150 for single individuals
• $20,300 for married couples filing jointly

Or

• A flat dollar amount of $95 per adult family member age 18 and older and $47.50 for each dependent under age 18. This amount is capped at $285 for 2014.

One percent (1%) of income will begin to exceed the flat dollar amount when an individual’s Modified Adjusted Gross Income exceeds

• $19,650 for Single individuals
• $39,300 for Married couples with no dependents
• Read more

Put another way, Single individuals subject to a penalty will pay the flat dollar amount when their income is between $10,150 and $19,650. Once their income exceeds $19,650 they will pay 1% of their income.

Married couples subject to the penalty will pay the flat dollar amount when their income exceeds...Read more

Click here to read the entire CrossLink Tax Update that includes further information on the additional penalty for not having health insurance for 2014.