These Oft-extended Tax Provisions are Now Gone

These Oft-extended Tax Provisions are Now GoneIs it real this time?

In one of the most visible expressions of confusion in tax policy out of Washington D.C. is the treatment of a short list of tax laws that have been repeatedly extended only to expire only to be extended once again. A list of the more common expired tax code provisions is listed here for your reference. These laws expire on midnight December 31st, 2013 unless…once again… the laws are extended.
Action to take

Action 1 Don’t count on it. Please do not plan on receiving any of these tax benefits in 2014. Review your 2013 tax return and adjust your withholdings to account for the additional income you will expose to tax without these deductions.
Action 2 Be prepared for anything. While none of these popular deductions may be available to you in 2014, if the past is any indication these laws may be extended once again. Lack of planned implementation of tax laws make it necessary for us to anticipate (guess) what might happen. So save those receipts!
Action 3 Review your options. The elimination of some of these tax laws does not mean there are not similar benefits in the other areas of the tax code. Here are some examples:

  1. Depreciation. Review Section 179 accelerated depreciation and alternative accelerated recovery methods.
  2. Tuition and fees deduction. Review other educational based tax benefits such as the American Opportunity Tax Credit and the Lifetime Learning Credit.
  3. Charitable contributions from retirement plans. Look at donating investments that have appreciated in value. Review the possibility of matching donations from your employer.

Will we ever return to a time when tax laws are predictable? Who knows for sure. But in the meantime the best you can do is to be as prepared as possible.

Health Insurance Penalty Starts Now!

Time to be thinking about health insurance

Health InsuranceThe health care legislation commonly known as Obamacare has many provisions that are being implemented over a number of years. As we start 2014, those that currently have no health insurance could be facing a tax penalty.

Beginning in January, 2014, everyone will be required to have health insurance or face a potential penalty. The initial penalty will be $95 per individual, $285 per family or 1% of your income whichever is greater. There is also a potential penalty assessed on employers who fail to offer employees health care insurance.

What is not known, is whether there will be some penalty grace period due to all the sign up problems with the government’s web site. If you are uninsured, your best defense is to review your health insurance options and register for an appropriate health insurance policy as soon as possible.

Health Insurance Details

Detail 1 Every state is required to have an insurance exchange. This exchange is a web site where everyone can view health insurance options. Unfortunately, this is the area of Obamacare that has seen a lot of negative press due to system problems.
Detail 2 No pre-existing condition limitation. You are no longer to be refused insurance because of a pre-existing condition or be charged an incremental premium based on health or gender.
Detail 3 Buy or pay the penalty? Hopefully, not many will be faced with this dilemma. Part of the health insurance bill is the requirement for most small businesses to offer a qualified plan or face a penalty billed to their business.
Detail 4 Will I be penalized? There are exceptions to the penalty if you have to spend more than 8% of your household income on the cheapest health care insurance premiums. There are also subsidies if you cannot afford health care insurance. This is in the form of a health insurance premium tax credit if your household income is between 100 and 400 percent of the federal poverty level.

If you do not have health insurance start looking now. With proper planning you should be able to avoid the unpleasant task of facing a tax penalty at the end of 2014.

As always, should you have any questions or concerns regarding your situation please feel free to call.