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Tag Archive for tax year

Will Your Favorite Tax Benefit Expire?

More than 50 tax provisions that Congress routinely extends on a yearly basis expired at the end of 2014. The big problem is each year they are extending the provisions later and later in the year creating uncertainty for taxpayers on whether they can depend on these tax incentives or not. This makes tax planning unclear and leaves taxpayers wondering about their projected tax liability.

For 2014, Congress waited almost to the end of the year to apply many of the provisions to the 2014 tax year. This was not only a problem for taxpayers but also for the IRS, which needed to adjust its forms and tax filing software at the last minute and actually had to delay the start of the tax season. Read more

Choosing The Correct Filing Status – Head of Household (HOH)

If you are unmarried, or married but considered unmarried (see below) on the last day of the tax year, you can file Head of Household if the following conditions apply:

(a) You paid more than half the costs of keeping up a home for the tax year, and

(b) A qualified person (see definition below) lived with you for more than half of the tax year.

Filing Head of Household can have substantial financial benefits over filing as a single status taxpayer. In filing as Head of Household, one enjoys lower tax rates and a larger Standard Deduction. Read more

2013 Automobile Depreciation Limits Released

The IRS on Monday issued the 2013 inflation adjustments to the depreciation limitations and lease inclusion amounts for certain automobiles under Sec. 280F (Rev. Proc. 2013-21).

For passenger automobiles (other than trucks or vans) placed in service during calendar year 2013 to which 50% first-year bonus depreciation applies, the depreciation limit under Sec. 280F(d)(7) is $11,160 for the first tax year.  Trucks and vans to which bonus depreciation applies have a slightly higher limit: $11,360 for the first tax year.

For passenger automobiles (other than trucks or vans) placed in service during calendar year 2013 to which bonus depreciation does not apply, the depreciation limit under Sec. 280F(d)(7) is $3,160 for the first tax year.  For trucks and vans to which bonus depreciation does not apply, the limit is $3,360 for the first tax year.

Bonus depreciation does not affect the limits after the first year.  For passenger automobiles, the limits are $5,100 for the second tax year; $3,050 for the third tax year; and $1,875 for each successive tax year.  For trucks and vans the limits are $5,400 for the second tax year; $3,250 for the third tax year; and $1,975 for each successive tax year.

Sec. 280F(c) limits deductions for the cost of leasing automobiles, expressed as an income inclusion amount according to a formula and tables prescribed under Regs. Sec. 1.280F-7.  The revenue procedure provides an updated table of the amounts to be included in income by lessees of passenger automobiles and another for trucks and vans, in both cases with lease terms that begin in calendar year 2013.

By Sally P. Schreiber – Journal of Accountancy Senior Editor, February 25, 2013

Edited and posted by Harold Goedde CPA, CMA, Ph.D. (taxation and accounting)

CIRCULAR 230 DISCLOSURE:  Pursuant to regulations governing practice before the IRS, any tax advice contained herein is not intended or written to be used and cannot be used by the taxpayer for the purpose of avoiding tax penalties that may be imposed on the taxpayer.

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