Reminders for Upcoming 2014 Filing Season

Below are some reminders about when the 2014 Filing Season will begin and some of the new tax law changes that will affect individual returns for Tax Year 2013:

Start of Filing Season
Both the individual and business filing season will be starting later due to the government shutdown this past October 2013.

First day of filing season will be:

• For individual returns: Friday, January 31, 2014
• For business (Corporate, Partnership, Fiduciary) returns: Monday, January 13, 2014

New Tax Provisions for 2013 Federal Returns
The following federal provisions are new for the upcoming filing season:

• New Simplified Method for Home Office Deduction
  In order to provide simplification for taxpayers that claim the home office deduction on Schedule C, the IRS now gives taxpayers the option to use a simplified method to calculate the home office deduction. Instead of using Form 8829, the taxpayer may multiply the square footage used for business footage by $5.
  For more information, see the following on the IRS website:
  • Simplified Option for Home Office Deduction
  • 2013 Schedule C instructions
• Itemized Medical Expense Deduction Threshold Percentage 
  Starting with 2013 individual returns, the threshold percentages for when medical expenses are included as an itemized deduction have changed to:
  • Taxpayers under age 65: 10%
  • Taxpayers age 65 and older: 7.5%
  For more information see the 2013 Instructions for Schedule A.

• Changes for High Income Individuals
• New 39.6% tax rate when AGI exceeds $400,000 ($450,000 for Married Filing Joint (MFJ))
• Itemized Deduction and Personal Exemption will begin to be phased-out when AGI reaches $250,000 ($300,000 for MFJ)
• Additional 3.8% tax will be imposed on net investment income when AGI exceeds $200,000 ($250,000 for MFJ). This will be calculated on new Form 8960 (Net Investment Income Tax Individuals, Estates and Trusts).
• Additional Medicare Tax will be due for taxpayers with wage and self-employment income over $200,000 ($250,000 for MFJ). This will be calculated on new Form 8959 (Additional Medicare Tax).

For more details on these changes, see the following:

• IRS Questions and Answers for the Additional Medicare Tax
• IRS Questions and Answers on the Net Investment Income Tax
• 2013 Form 1040 instructions (Deduction for Exemptions Worksheet on Page 40) for phase out of the personal exemption
• 2013 Schedule A instructions (Itemized Deductions Worksheet on page A-13) for phase out of itemized deductions

For a complete listing of federal tax law changes that will affect individual 2013 tax returns, see the Things to Know for the Current Tax Year section of the CrossLink Tax Resource Center.

IRS Resources for the Earned Income Tax Credit

As the 2014 filing season draws near, now is a good time to be reminded about the IRS EITC Central website and what valuable information it has to offer preparers that are completing returns claiming the Earned Income Tax Credit.

Here is an example of some of the useful information it contains:

• Frequently Asked Preparer Questions
  These frequently asked preparer questions have been categorized into eight areas to help the preparer narrow down what they are interested in. The categories are Age, Relationship and Residency, Basic Qualifications, Due Diligence, Earned Income, Divorced and Separated Parents, Fraud, Qualifying Child of More than One Person, and Other EITC related questions.
  When you click on a topic area it will display the preparer question and the IRS answer. As part of the answer the IRS has highlighted the newest due diligence requirements that were finalized at the end of 2011.
• Preparer Due Diligence
  This section provides links to IRS EITC due diligence law and regulation explanation, the importance of Form 8867 (Paid Preparer's Earned Income Tax Checklist), the consequences of filing incorrect EITC returns, and other resources for the preparer to review that are related to their due diligence requirements when preparing returns that claim the Earned Income Tax Credit.
• IRS EITC Preparer Compliance Activities
  Included in this category is information about what the IRS is doing to educate preparers on the most common EITC errors and what compliance activities the IRS is performing.
• Hot Topics for Return Preparers
  Hot Topics provides preparers with information on what the IRS is presently doing in the EITC area. Here, you will find the latest information about the IRS educational letters and visits that take place each fall, information about due diligence audits that take place each fall, and more.
• EITC Training and Videos
  The IRS provides the following training programs and videos to help educate preparers on what their earned income tax credit due diligence requirements are:
• IRS EITC Due Diligence Training Module
• Due Diligence Videos
• IRS EITC Schedule C and Record Reconstruction Training
• Other Educational Opportunities

2014 Tax Season to Open January 31

The IRS has officially announced that individual tax returns can begin to be electronically filed on Friday, January 31, 2014. The IRS stated in a press release:

"The new opening date for individuals to file their 2013 tax returns will allow the IRS adequate time to program and test its tax processing systems. The annual process for updating IRS systems saw significant delays in October following the 16-day federal government closure."

Read the full press release here: http://www.irs.gov/uac/Newsroom/2014-Tax-Season-to-Open-Jan.-31;-efile-and-Free-File-Can-Speed-Refunds.

CrossLink Business is Live and Available for Download

We are happy to announce that CrossLink Business is live and available for download! This year’s software includes several key updates including:

• 100% integration with CrossLink 1040 
• States to be released for CrossLink Business this coming tax season include: CA, FL, GA, IL, NY, TN, NJ, MS, AL, SC, MI, LA, NC, PA, AZ, OH, TX
• Import financial data from QuickBooks
• Year-to-year transfer of data
• Carryover K-1 information from CrossLink Business to CrossLink 1040

To learn more about CrossLink Business contact your CrossLink Team, or visit https://www.crosslinktax.com/products/crosslink_business.asp.

CrossLink 1040 is Live and Available for Download!

We are happy to notify you that CrossLink 1040 Professional Tax Software for Tax Year 2013 is LIVE and available for download! Go to the CrossLink Customer Portal to download it today.

Contact a CrossLink Team Member today to learn more.