Now that we have turned over a new year, you can be sure that there will be changes to the current tax laws. From health savings accounts to retirement contributions, our tax partner, Dave Toney from AccounTax, offers a checklist of tax changes to help you plan the year ahead.
Filing Season Delayed by 10 Days
Taxpayers should note that the 2014 tax season opens on Jan. 31 instead of Jan. 21, 2014, due to the government shutdown that took place in October 2013. The April 15 tax deadline is set by statute and will remain in place, although taxpayers can request an automatic six-month extension to file their tax return.
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Individuals
– For 2014, more than 40 tax provisions are affected by inflation adjustments.
– For 2014, the tax rate structure, ranging from 10 to 39.6 percent, remains the same as in 2013, but tax-bracket thresholds increase for each filing status.
– Standard deductions and the personal exemption have also been adjusted upward to reflect inflation.
“Kiddie Tax”
This tax is applied to your child’s unearned income of more than $2,000 ( Unearned income meaning investments, such as interest, dividends and capital gains, not income from wages or self-employment). For taxable years beginning in 2014, the amount that can be used to reduce the net unearned income reported on the child’s return that is subject to the “kiddie tax,” is $1,000 (same as 2013).
Health Savings Accounts (HSAs)
In conjunction with a High Deductible Health Plan (HDHP), contributions to a Health Savings Account (HSA) are used to pay current or future medical expenses of the account owner, his or her spouse, and any qualified dependent. For 2014, a qualifying HDHP must have a deductible of at least $1,250 for self-only coverage or $2,500 for family coverage (unchanged from 2013) and must limit annual out-of-pocket expenses of the beneficiary to $6,350 for self-only coverage (up $100 from 2013) and $12,700 for family coverage (up $200 from 2013).
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Self-only coverage
For taxable years beginning in 2014, the term “high deductible health plan” means, for self-only coverage, a health plan that has an annual deductible that is not less than $2,200 (up $50 from 2013) and not more than $3,250 (up $50 from 2013), and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $4,350 (up $50 from 2013).
Family coverage
For taxable years beginning in 2014, the term “high deductible health plan” means, for family coverage, a health plan that has an annual deductible that is not less than $4,350 (up $50 from 2013) and not more than $6,550 (up $100 from 2013), and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $8,000 (up $150 from 2013).
AGI Limit for Deductible Medical Expenses
In 2014, the deduction threshold for deductible medical expenses remains at 10 percent (same as 2013, but up from 7.5 percent in 2012) of adjusted gross income (AGI); however, if either you or your spouse were age 65 or older as of December 31, 2013, the new 10 percent of AGI threshold will not take effect until 2017.
If you have questions about the tax changes for 2014, please contact Dave at dat.accountax@fuse.net or 513-528-5566. You can view the 2014 Tax checklist in its entirety here.