ANDES, ERNST & BLACKMER INCOME TAX 19401 E. US 40 Hwy Ste 170 Independence, MO 64055 816-795-9882 Fax: 816-795-9883 WEBSITE: aebtax.com December 22, 2014 We hope you have all had a wonderful summer, and are enjoying this Holiday Season. This newsletter serves to help you prepare for the upcoming tax filing season and be informed of any changes. First, we want to thank you so much for the confidence you have all shown by your many referrals of new clients, and we would greatly appreciate your continued referrals. Please remember to check our website at aebtax.com for helpful worksheets, updates, and news. The following deductions are still allowed regardless of whether or not you itemize your deductions 1. American Opportunity Education Credit (for degree students enrolled at least ½ time). 2. Lifetime Learning Education Credit (for non-degree students and those enrolled less than ½ time) 3. Health Insurance and Long Term Care premiums are deductible on Missouri only if NOT withheld pretax from employer. 4. IRA s, HSA s, Alimony paid, & Adoption expenses 5. Moving expenses for certain job related moves 6. Capital losses from investments 7. Tuition and Fees deduction for those who do not qualify for the education credits above. 8. Educator supply expense for professional educators. 9. Just last week this expired credit was renewed through Dec 2014. (They really gave us a lot of heads up on this one!!!!) There is still a small residential energy credit available if you have not already used $500 in energy credits in the past. 10. Student loan interest IRA contributions: $5,500 (plus $1,000 for each taxpayer age 50 or over) Standard Business Mileage Rate 2014 56 cents 2015 57 ½ cents
Gift giving and estate tax exemptions The annual gift exclusion for 2014 & 2015 is $14,000 ($28,000 if a married couple each gives). This amount is increased if you pay tuition and or medical expenses for the recipient. The estate tax exclusion for 2014 is $5,340,000, and increases to $5,430.000 in 2015. The following deductions (which were to expire 12/31/13) are extended through 12/31/14. 1. Option of deducting sales tax in lieu of deducting state and local income taxes. 2. Tuition and Fees deduction for those not qualifying for the American Opportunity Credit or the Lifetime Learning Credit (both mentioned above) 3. Educator expenses for non-itemizers (those who itemize deductions can still deduct) 4. The ability to exclude from income the debt forgiveness on personal residences 5. Donating IRA required minimum distribution directly to a charity 6. PMI insurance (only allowed on homes purchased in 2007 or later) Two new Medicare taxes began in 2013 1. There is an additional 0.9% Medicare tax on all wages and self-employment income in excess of $200,000 (single), $250,000 (married filing jointly), and $125,000 (married filing separately). Part of this tax may have been withheld from your employer. 2. There is a 3.8% Medicare tax on investment income only for taxpayers whose total income exceeds the amounts shown above. This tax will be on the lower of the total investment income, or the amount your total income exceeds the above amounts. Investment income includes interest earned, dividends, capital gains, rental profits, etc. Penalty for not having medical insurance begins in 2014 The penalty will be prorated by month. You are responsible for having medical insurance for the taxpayer, spouse, and any dependents (age 18 and under) claimed. Whoever claims a dependent in any given year will owe the penalty if that dependent does not have health insurance. Medicare, Medicaid, & VA programs all count as having coverage. Those who have income low enough to be not required to file a tax return also do not have to have coverage. There are a few other exemptions, including hardships (you will need your hardship exemption letter from the Health Insurance Marketplace) The fee in 2014 is the greater of $95 per adult plus $47.50 per child (only have to count 2 children max), or 1% of the sum of (total household income (including dependents) minus your filing requirement threshold). If this may apply to you, please call us to obtain your filing requirement threshold. The penalty increases in 2015 to $325 per adult and $162.50 per child, or 2% of the above income formula. It further increases in 2016 to $695 per adult and $347.50 per child, or 2.5% of the above income formula. After that, it is only increased for inflation. The penalty is prorated by months, and there is no penalty if the period without coverage is less than 3 months consecutive.
If you have proof of coverage, bring it along and we will scan it into your permanent file. No proof is required for your 2014 tax return, however you will be required to have proof next year when you file your 2015 return New 2014 Health Insurance Subsidy Credit for Individuals This credit is only available to those who are not eligible to participate in an employer plan or their spouse s employer plan. If an employer plan is available, you cannot take this credit even if you choose not to enroll in that employers plan. It is also not available to anyone covered by VA, Tricare or Medicare, or anyone who has reached age 65. Additionally, the insurance must be purchased through the government Marketplace Health Insurance. You cannot purchase your own policy elsewhere. To qualify, the total household income (including dependents) must be under 400% of the Federal Poverty Level. The higher the income, the lower the amount of the credit. The credit can be advanced and paid directly to the insurance company each month. The advance credit is based on your estimated 2014 income, and when you file your actual 2014 tax return, you will settle up with the IRS. If your actual income is higher, you will owe back some of the advance credit. If your actual income is lower, you will get more credit on that tax return filing. You can find the Federal Poverty Levels on-line, or call us and we will be happy to help. If you take the advance credit, you sure don t want to go to the casino and win a jackpot, or withdraw money from a 401k or IRA, or sell anything that would generate a large capital gain!! If you are eligible for Traditional IRA contributions, and you have the cash to do so, you can contribute to these IRA s to get your income lower for a larger credit. Same for HSA s. IMPORTANT: IF YOU PURCHASED MEDICAL INSURANCE FROM THE GOVERNMENT MARKETPLACE, YOU WILL RECEIVE A FORM 1095-A BY JANUARY 31. YOU MUST BRING THIS FORM. YOUR RETURN CANNOT BE COMPLETED WITHOUT IT. IF YOU LOOSE IT, YOU MUST GO ON-LINE OR CALL TO GET A REPLACEMENT. New tax rates and capital gains rates for high income filers A new tax bracket was added in 2013 for incomes over $400,000 (single), or $450,000 (married filing jointly). The new bracket is 39.6% on incomes exceeding these amounts. There is also a new rate for long term capital gains and qualifying dividends for taxpayers whose income exceeds these amounts. That new rate is 20% (plus the 3.8% Medicare tax mentioned earlier) Long term capital gains and qualified dividends 10 or 15 % bracket 0 tax 25 35 % bracket 15% tax (plus possible 3.8% Medicare tax) 39.6 % bracket 20% tax (plus 3.8% Medicare tax) Appointments Please call our receptionist to schedule your appointment. If you prefer to drop off your information, we will call you at a later time to address any questions. This will keep the wait
time for those with appointments to a minimum. Mailing, faxing, or e-mailing your tax return information is also still available if you prefer. When bringing in more than one return (children, parents, etc.) or adding a business or rental etc. Please let the receptionist know when you schedule your appointment if you may need extra time so they can schedule time accordingly. We do not charge by the hour, and it is OK if you don t end up needing the time. Same sex spouses Couples legally married in any state that recognizes same-sex marriages can now file Federal tax returns as Married Filing Jointly. Contact Info: Linda lindaandes@gmail.com 795-9882 Ext 1# Kristy kristy@kepayroll.com 795-9882 Ext 5# Brian brianblackmer@gmail.com 795-9882 Ext 6#
WHAT TO BRING LIST NEW CLIENT? Copy of last year return Health Ins purchased through marketplace need Form 1095-A Estimated tax payments, if any Interest Income (1099-INT) Dividend Income (1099-DIV) Pension Income (1099-R) Unemployment Comp. (1099-G) Soc. Security Benefits or RRTA Distributions from Profit-Sharing-401(k)- IRA s, etc. (1099-R) Alimony income/expense Commissions-Independent-Contractor-Self Employment income and expenses (call for add l worksheet) Railroad Retirement Benefits (RRTA-1099) Long Term Care Insurance Premiums (even if you don t itemize) Educators Classroom expenses incurred (even if you don t itemize) Change of job moving expenses Rental property income and expenses Income from Partnerships, estates trusts, S-Corps, etc. (K-1) Did you sell any real estate (see personal residence below); securities: stocks, mutual fund share, etc? You will need: Date of sale and sales price Records of date of purchase and original cost Cost of improvements (real estate) Did you sell your personal residence? You will most likely not have to report this, but please let me know. In the event it is reportable, you will need: Closing statement from purchase of home Closing statement from sale of home Records of any improvements Birthdates & SSN s for everyone on return IRA/SEP/KEOGH contributions/rollovers/withdrawals Gambling/Lottery Winnings Child care expenses so you could work - need name, address, SSN, and full amount paid to each day care provider even if you did pre-tax plan through your employer. Health Insurance Premiums only if not payroll deducted pre-tax (even if you do not itemize deductions) HSA 1099 form and contributions (only if not payroll deducted) Jury pay - prizes - awards Did you sell or trade in any business assets e.g., car, computer, rental property? You will need: Records of date of purchase and original cost Records of prior depreciation Any settlement statements Do you make interest payments on a student loan? Tuition for yourself, your spouse, and your dependents? Books possibly also. Contributions & distributions from state tuition programs Adoption expenses To itemize your deductions, we will need: Out of pocket medical expenses (must exceed 10% of income to help ( 7.5% if 65 or over) Health Insurance counts only if not paid through a pre-tax payroll deduction. Did you buy or sell a home? I will need your closing statements for possible deductions Home mortgage interest (1098) Real Estate Tax PMI on homes bought 2007 or later Personal Property Tax for property-car, boat, etc. Sales Tax on cars, trucks, RV s, boats, motorcycles) Charitable contributions Employee business & miscellaneous expenses (must exceed 2% of income to help) Business Expenses Travel/transportation (call for auto wrksht) Meals/Entertainment Lodging Job related tools, supplies, dues, subscriptions, licenses, permits, etc. Business Gifts Job related educational expenses Job seeking expense Union dues Safety items/uniforms Uniform cleaning expense Business pager/cell phone Miscellaneous: Safety deposit box fees Tax preparation fees Gambling losses (only to the extent of winnings claimed) IRA fees not withheld from IRA account and investment expenses