New Tax Provisions for 2014 to Watch Out forTax Professionals' Resource
January 22, 2014 — 2,051 views
With the countdown having begun for the 2014 tax season, certified public accountants (CPAs) and other tax professionals across the nation are all set for the busy days ahead. As a CPA, you will need to educate your clients about the following new provisions mentioned below:
Tax Credit for Health Insurance
Health care legislation enacted in 2010 offers a lot of opportunities for CPA companies, not only to get more clients, but also to keep themselves updated. The newest is the much-hyped and reported health insurance subsidy which will be applicable if an individual’s household income falls in the 100% to 400% of federal poverty line and if a person has no access to coverage sponsored by employers.
For employers who have 25 or less full-time employees, paying their staff an average annual pay under $50,000, and who pay a minimum of half of premium cost for employee health insurance, the tax credit will increase from 35% of premiums paid by employer to 50%.
Watch out for That Penalty
If individuals don’t have enough health insurance, they are susceptible to a penalty, as per laws under Obamacare. The exemptions are for lower-income bracket persons and for those whose current health insurance was cancelled. Essentially, the penalty for 2014 is 1% of your annual household earnings or $95 for every adult not insured and $47.50 for a child, which goes up to $285 for a family. The tax payer will have to pay this penalty while filing 2014 tax returns in 2015.
A Carry-Over Deal
Employers can allow their staff to carry over to the next year as much as $500 of unused balance of health care flexible spending accounts (FSAs) from the earlier year. As a CPA, you will need to tell your client to check on the balance and advise on steps to be taken before March 15th. Staying on the healthcare front, your client also needs to know that the Medicare surtax is 3.8%.
The tax rate structure (10%-39.6%) is the same as the year gone by, but the higher levels have shot up for every filing group. The Alternative Minimum Tax exemption for 2014 is $52,800 for single people and $82,100 for married couples who file jointly. Same-sex married couples now will follow the same federal tax filing rules as those followed by heterosexual couples.
For 2013 returns filed in 2014, the Internal Revenue Service will now offer an easier deduction option for home-office filers. The new option is $5 per square foot of your client’s home office, going up to 300 square feet which is the maximum.