As we enter tax season, many issues abound. Congress is back in session and, you never know, may at some point start discussing ideas for tax reform. Whether or not Congress tackles reform provisions this year, things may change within the tax landscape. That’s because every year there are a plethora of provisions that will expire unless Congress takes action. A list of these expiring federal tax provisions is detailed in a report from the Joint Committee on Taxation.
[CLICK HERE to read the article, "Tax Policy Update," at Mondaq.com, Jan. 20, 2014.]
[CLICK HERE to read the "List of Expiring Federal Tax Provisions," at the Joint Committee on Taxation, Jan. 10, 2014.]
Also on the tax front, the IRS continues to issue new guidance for the 2014 tax year. Starting January 1, participants in employer 401(k) plans may convert assets from tax-deferred vehicles to a Roth account (if offered within the plan). Before this year, only participants eligible for retirement distributions could take advantage of this option. Assets converted will be taxed in the year they transfer to the Roth account, and the beauty of this new feature is that you can pay taxes on your previous contributions while you’re still working – then enjoy income tax-free distributions of principal and subsequent earnings once you retire.
[CLICK HERE to read the article, "IRS Issues Notice on Expanded In-Plan Roth Conversion Option," at Morgan Lewis, Dec. 18, 2013.]
If you owe a backlog of taxes, don’t forget about the IRS’ Fresh Start Program. This program permits taxpayers to make monthly installment payments on back taxes without getting hit with a federal tax lien. Last April the agency expanded its provision to allow individual taxpayers who owe up to $50,000 to make payments via a direct debit installment plan for up to six years. The easiest way to apply for a payment plan is to use the Online Payment Agreement tool at IRS.gov.
[CLICK HERE to read the news release, "IRS Fresh Start Program Helps Taxpayers Who Owe the IRS," at IRS, April 17, 2013.]
It is likely that as we file our 2013 returns this year, there are lessons we will learn following the first full year since the American Taxpayer Relief Act of 2012 (ATRA) was passed. A representative of AllianceBernstein projects that between ATRA and the new Medicare surtax, some taxpayers will face up to 14 percent higher taxes over last year.
Complex returns may require the services of a qualified tax advisor, but many people opt to complete their own returns – which is not a bad way to learn important lessons first hand to help plan for next year. The IRS has created a series of videos to help individuals prepare their returns focusing on a variety of tax topics.
[CLICK HERE to read the blog, "Lessons Learned in 2013," at AllianceBernstein, Dec. 15, 2013.]
[CLICK HERE to read the article, "IRS Offers Videos to Help Taxpayers Preparing to File in 2014," at the IRS, Jan. 3, 2014.]
We’re happy to work with you on 2014 financial strategies. If you have questions or would like to schedule a no-obligation meeting, please contact us.
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These articles are being provided to for informational purposes only and should not be used as the basis for any financial decisions. While we believe this information to be correct, we do not guarantee the accuracy or completeness of the information included. All clients are encouraged to consult qualified tax and legal professionals before making any decisions about your personal situation.