Introduction and New Law

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1 Chapter 1 Introduction and New Law 1 New laws through November 1 See Chapter 1 2

2 15 Form 1040 for 2014 New lines for ACA: 46 Excess PTC repayment 61 Check box if have MEC for each month for each family member 69 Claim PTC 16

3 Also new in instructions Effect of Pell Grant on AOTC See Pub 970 and Treasury Fact Sheet (see outline) Link in instructions to IRS website to help you know if eligible for education credit EZ Can t use if claim Premium Tax Credit 19

4 Remember March 2010? 20 Affordable Care Act IRC 7216, Disclosure or Use of Information by Tax Return Preparers 2. Medical Loss Ratio (MLR) 3. Reporting Employer Provided Health Coverage in Form W-2 4. Net Investment Income Tax 5. Additional Medicare Tax 6. Minimum Value 7. Information Reporting on Health Coverage by Employers 8. Information Reporting on Health Insurance Coverage 9. Disclosure of Return Information 10. Small Business Health Care Tax Credit 11. Application of the Affordable Care Act to Health Reimbursement Arrangements, Health Flexible Spending Arrangements and Certain Other Employer Healthcare Arrangements 12. Health Flexible Spending Arrangements 13. Medical Device Excise Tax 14. Changes to Itemized Deduction for Medical Expenses 15. Health Insurance Premium Tax Credit 16. Individual Shared Responsibility Provision 17. Health Coverage for Older Children 18. Excise Tax on Indoor Tanning Services 19. Adoption Credit 20. Transitional Reinsurance Program 21. Medicare Shared Savings Program 22. Qualified Therapeutic Discovery Project Program 23. Group Health Plan Requirements 24. Annual Fee on Health Insurance Providers 25. Tax-Exempt 501(c)(29) Qualified Nonprofit Health Insurance Issuers 26. Medicare Part D Coverage Gap donut hole Rebate 27. Additional Requirements for Tax-Exempt Hospitals 28. Annual Fee on Branded Prescription Pharmaceutical Manufacturers and Importers 29. Modification of Section 833 Treatment of Certain Health Organizations 30. Limitation on Deduction for Compensation Paid by Certain Health Insurance Providers (amended section 162(m)) 31. Employer Shared Responsibility Payment 32. Patient-Centered Outcomes Research Institute 33. Retiree Drug Subsidies 2015 get ready now! 21

5 Regulations issued in 2014 See list at 22 Reminders about two regs from

6 NIIT - One-Time Regrouping (b)(3)(iv) Regrouping fresh start election. For first tyba 2013 where 1411 would apply. If subject to NIIT for 2013 and did not regroup, may make election for first TY beg after 2013 that are subject to 1411 May elect only once and are then bound by it Special rules for amended returns and audits Disclose per Rev. Proc requirements 24 TPR - De minimis safe harbor election For acquisition or production of a unit of tangible property (a)-1(f) Two options: 1) If have applicable financial statement At beg of TY have written accounting procedures to treat as expense for non-tax purposes, amounts paid for property costing below specified amount or for property with economic useful life of 12 months or less; can t exceed $5,000 per invoice (or per item substantiated by the invoice) 26

De minimis safe harbor election 2) No AFS At beg of TY has accounting procedure treating as an expense for non-tax purposes, amounts paid for property costing less than specified dollar amount, or

Land Rotable, temporary, and standby emergency spare parts that T elects to capitalize and depreciation under 1.

7 De minimis safe harbor election 2) No AFS At beg of TY has accounting procedure treating as an expense for non-tax purposes, amounts paid for property costing less than specified dollar amount, or with economic useful life of 12 months or less Can t exceed $500 per invoice (or per item as substantiated by the invoice) Safe harbor n/a to Property intended to be included in inventory property Land Rotable, temporary, and standby emergency spare parts that T elects to capitalize and depreciation under (d) Rotable and temp spare parts T accounts for under optional method for rotables under (e) 27 How to make election Make for all amounts paid during TY Attach statement to timely filed original return (incl ext) for TY in which amounts paid. Title it - Section 1.263(a) 1(f) de minimis safe harbor election Include: Taxpayer s name, address, TIN Statement that T is making de minimis safe harbor election under 1.263(a) 1(f). 28

8 Chapter 2 Provisions Expired or Expiring 29 Extenders Legislation For the 55 (57) items that expired 12/31/13 + a few in

9 12/3/14 House extended almost everything retroactively 1 year H.R Tax Increase Prevention Act of 2014 Vote Passed in Senate 12/16/ Voting no: Senator Wyden 34

P.L. 113-295 (12/19/14) Extenders 35 Individuals Deduction of

Equalization of exclusion for employer-provided commuter

premiums Deduction state and local general sales taxes in lieu

real property for conservation purposes; Deduction of qualified

10 P.L (12/19/14) Extenders 35 Individuals Deduction of teacher expenses Principal residence CODI exclusion Equalization of exclusion for employer-provided commuter transit and parking benefits; Deduction of mortgage insurance premiums Deduction state and local general sales taxes in lieu of income taxes; Deduction of contributions of capital gain real property for conservation purposes; Deduction of qualified tuition and related expenses; Exemption of IRA distributions for charitable purposes. 36

11 Businesses Many, including Research credit New markets tax credit 3-year racehorse 15 year SL qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements Expensing rules for film and television productions 37 More Bonus depreciation Eligible property must be placed in service before 1/1/15 Higher 179 amounts ($500,000/$2 million) For tax years beginning before 2015 $25,000 / $200,000 for TY beginning after 2014 Temp 100% exclusion gain on QSBS For QSBS acquired in 2010 through 2014 Reduction in S corp BIG period Several energy provisions 38

12 QSBS exclusion percentages For QSBS issued After 8/10/93 and Before 2/18/09 50% After 2/17/09 and Before 9/28/10 75% After 9/27/10 and before 1/1/15 100% Issued after 12/31/14 50% AMT preference also varies depending on when QSBS was issued 39 Not extended 1. Credit for 2- or 3-wheeled plug-in electric vehicles ( 30D(g)) 2. Credit for health insurance costs of eligible individuals ( 35(a)) 3. Credit for energy efficient appliances ( 45M(b)) 4. Placed-in-service date for partial expensing of certain refinery property ( 179C(c)(1)) 5. New York Liberty Zone: tax-exempt bond financing ( 1400L(d)(2)(D)) 6. Extension of replacement period for nonrecognition of gain for areas damaged by 2008 Midwestern severe storms, tornados and flooding ( 702 of Division C of P.L ) 40

13 Caution! All expire by 1/1/15! 41 Also Technical corrections Removal of deadwood Increase JCT refund review from $2 million to $5 million for C corps ( 6405) eff. 12/19/14 Cost = $41.6 billion over 10 years $81.4 billion for

14 ABLE added to extenders bill H.R Achieving a Better Life Experience Act House passed 12/3/14 Vote A plan A Qualified Able Programs State program Contribute cash up to annual gift exclusion amount into fund No deduction For qualified disability needs of designated beneficiary

Eligible individual for 529A Plan Entitled to benefits under SSA for blindness or disability Blindness or disability occurred before age 26 Disability

15 Eligible individual for 529A Plan Entitled to benefits under SSA for blindness or disability Blindness or disability occurred before age 26 Disability certification is filed with IRS for the tax year. Tax on excess contributions ( 4973) First $100,000 in ABLE account exempt from SSI resource limits 45 46

Includes penalties under Section 6695. http://rules.house.

16 Includes penalties under Section New figures for

17 SS Wage Limit for 2015 SSA Fact Sheet released 10/22/14 $118,500 $117,000 in Inflation adjusted amounts for 2015 Rev. Proc (2014 figures) 39.6% bracket starts at $413,200single ($406,750) $464,850 MFJ ($457,600) Standard deduction $6,400 single ($ 6,200) $12,600 MFJ ($12,400) Personal exemption $4,000 ($3,950) 50

18 Inflation adjusted amounts for 2015 Rev. Proc (2014 figures) Annual gift exclusion remains at $14,000 Unified credit for estate tax = $5,430,000 ($5,340,000) FSA employee contribution = $2,550 ($2,500) Small business health credit $25,800 ($25,400) 51 Mileage rates for 2015 Notice per mile for business miles driven 56 in is for depreciation 23 per mile for medical or moving purposes 23.5 in per mile for charitable Same as 2014 (set by statute) 52

19 2015 Pension Limitations Employees in 401(k), 403(b) and most 457 plans Increase from $17,500 to $18,000 Catch up Increase from $5,500 to $6,000 More: Contribute-up-to-$18,000-to-their-401(k)-plans-in

2016 Year-End Tax Planning Letter

9NOV2016 2016 Year-End Tax Planning Letter Dear Vista Wealth Clients and Friends, As 2016 draws to a close, you should give consideration to year-end tax planning strategies. This letter highlights some