Obamacare Penalty
- Under Obamacare’s individual shared responsibility provision, beginning with your 2014 tax returns, you must let the IRS know when you file your tax return that you had the required minimum essential health care coverage or were exempt. If you have qualified coverage, you’ll get a Form 1095-C from your employer or a Form 1095-B from the insurer. In these cases, you’ll simply check a box on your tax return.
Beware of IRS Phone Scams
- The IRS respects taxpayer rights when resolving payment of your taxes, it’s relatively easy to tell when a supposed IRS caller is a fake
- As per the IRS website, here are five things scammers often do, but the IRS will not:
- Call you to demand immediate payment. The IRS will not call about taxes you owe without first mailing you a bill
- Demand that you pay taxes without giving you the chance to question or appeal the amount they say you owe
- Require you to use a certain payment method for your taxes, such as a prepaid debit card
- Ask for credit or debit card numbers over the phone
- Threaten to bring in local police or other law-enforcement to have you arrested for not paying
Mileage Deduction Increase
- The Internal Revenue Service issued the 2015 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
- Effective January 1, 2015, the standard mileage rates for the use of a car, van, pickup or panel truck is:
- 57.5 cents per mile for business miles driven, up from 56 cents in 2014
- 23 cents per mile driven for medical or moving purposes, down half a cent from 2014
- 14 cents per mile driven in service of charitable organizations
Day Camp Deductions
- If you and your spouse both work or are full-time students, you may be entitled to the federal Dependent Care tax credit for the cost of summer day camps as childcare
Required IRA Distributions
- If you’re at least age 70½, you must take a required minimum distribution (RMD), from your traditional IRA
- You normally must take your RMD by Dec. 31, 2014
- If you turned 70½ in 2014, you have until April 1, 2015
- If you have more than one traditional IRA, you figure the RMD separately for each IRA. However, you can withdraw the total amount from one or more of them
- If you don’t take your RMD on time you face a 50 percent excise tax on the RMD amount you failed to take out
- You are not required to take an RMD from your Roth IRA
Mortgage Deductions
- Points paid solely to refinance a home mortgage usually must be deducted over the life of the loan
- If some of the refinanced mortgage was used to finance improvements to the home and if the taxpayer meets certain other requirements, the points associated with the home improvements may be fully deductible in the year the points were paid
- If a homeowner is refinancing a previously refinanced mortgage, the balance of the points paid for the previously refinanced mortgage may be fully deductible in the year of refinance
Employer Gifts
- Employer gifts in the form of cash, a gift certificate or another item that can easily be exchanged for cash are taxable, no matter what the amount. However, if your employer gives you a turkey, ham or other item of “nominal value” for the holidays, you don’t have to include the value in your income
Taxable Settlements
- A settlement received to compensate you for physical injury or illness is not taxable
- Punitive damages, which are intended to punish the individual or company that caused your distress, are taxable
- The portion of a settlement of an employment-related lawsuit that covers lost wages is taxable
Tax Penalties
- For purposes of determining the underpayment tax penalty, income tax withholdings are considered to be made ratably over the year, regardless of when actually withheld; whereas estimated tax payments are credited as of the date paid. Therefore, you should first consider having any anticipated tax shortfall withheld by your employer
State Tax Deduction
- If you itemize deductions, you have the option of deducting the greater of state and local sales tax or of state and local income taxes
- Those who usually can take advantage of deducting sales tax are those that:
- Live in a state without an income tax
- Are retired and pay little state income tax due to the non-taxability of retirement and social security income
- Made big purchases subject to sales tax such as a car or boat. Although the IRS has a table allowing you to claim a standard sales tax deduction, you can add to it the sales tax from large purchases
Does the IRS know you?
- If you were married or divorced during the year and changed your name, make sure to inform the Social Security Administration (SSA) by filing Form SS-5 which is available on the SSA website, www.ssa.gov, by calling toll free 1-800-772-1213 and at local offices.
- This will avoid a mismatch between your name and social security number on SSA records and those on your tax return that will cause a rejection of your return by the IRS; as well as ensure proper credit for your social security and Medicare contributions
Please contact Bob Jahelka at 516-861-3707 or , if you have any additional tax questions.