CD Tax & Financial LLC

 

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November 2014
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Here are a few misc items that we thought might interest you.


 

Beware of Scam IRS Calls 

The IRS has issued a consumer alert providing taxpayers with tips to protect themselves from telephone scam artists who call pretending to be with the IRS. Remember that the IRS will never:

1. Call you about taxes you owe without first mailing you an official notice.

2. Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.

3. Require you to use a specific payment method for your taxes, such as a prepaid debit card.

4. Ask for credit or debit card numbers over the phone.

5. Threaten to bring in local police or other law-enforcement groups to have you arrested for not paying. 


What's that New Tax?

New taxes you may first notice in 2014 include a Medicare surtax. The Net Investment Income Tax (NIIT) is "a 3.8 percent surtax that will be due on the lesser of your net investment income for the year, or the amount by which your "modified adjusted gross income" - or MAGI - exceeds those income thresholds. And yes, if you're a high earner, you might get hit with both the 0.9 percent Additional Medicare Tax and the 3.8 percent NIIT surtax. Note that the Additional Medicare Tax applies to your earned income and the NIIT applies to investment income. What investment income is subject to this? Generally interest, dividends, capital gains, rental and royalty income, non-qualified annuities, businesses that are taxed on your return as "passive activities" and income from businesses involved in the trading of financial instruments or commodities are affected. Please call or email for more information on this.

 

Expiring Tax Breaks 

More than 50 tax breaks expired in 2013, so you can expect some new taxes in 2014 - or higher taxes - unless some or many of them are reinstated. That may well happen, as many tax breaks are repeatedly renewed. Expiring breaks include a deduction of up to $250 for teachers who buy classroom supplies with their own money and a deduction of up to $4,000 for qualified tuition and related expenses - and more. Note that unlike many of the taxes described above that actually took effect in 2013, these breaks remained in effect through 2013 and hopefully were claimed on your 2013 tax returns. But for now, they're scheduled to disappear in 2014.


The more you know about taxes and 2014's new taxes in particular, the better you can plan and the less you'll likely pay. We will keep you updated on the extension of these credits in a future newsletter. 

  

Charity

ALL deductions of any amount must have a receipt. Any individual contribution over $250 must also have an acknowledgement letter from the charity, and the letter must be dated by the date we file your return. The letter should show the date and amount of any individual contribution over $250 and should also state that no goods or services were received in return for the contribution.

 

Foreign Accounts
If you have read any news in the last year, you know that the IRS is looking closely for offshore accounts. If you have an account, retirement account, or business interest with a value over $10,000 in a foreign country, or a foreign business ownership (not through a mutual fund), please let us know as some special rules will apply to you. There are substantial penalties for failure to disclose these items.

 

Children/Student Tax Returns

Under absolutely no circumstances can you allow your dependent children or college students to file their own returns this year. We must file their return because of the Affordable Care Act. Allowing a child to file their own return, particularly a student, can cost the child and parent literally thousands of dollars in Health Care penalties and/or credits.


Gift Changes

Effective 1/1/2013, the amount you may give to one person in one year without any return filing requirements was increased to $14,000. Very, very few Americans need to worry about Federal estate taxes because of changes in the estate tax limit at the Federal level.

 

 

     

We hope you have found this information useful and as always if you have questions please do not hesitate to give our office a call!

  

  
Sincerely,
  


Cheryl Wilson, EA, CFP�
CD Tax & Financial LLC

480-354-1040 Phone

480-354-1041 Fax

[email protected]


 


 


 

 

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