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Wolters Kluwer, CCH can assist you with stories, including interviews with subject experts.
Also, the 2014 Whole Ball of Tax is available in print. Please contact:
 
Eric Scott
(847) 267-2179
eric.scott@wolterskluwer.com
 
Brenda Au
(847) 267-2046
brenda.au@wolterskluwer.com

Visit the Whole Ball of Tax site often as new releases and other updates will be posted
throughout the tax season.

Wolters Kluwer, CCH provides special CCH Tax Briefings on key topics at: CCHGroup.com/Legislation.

 
2014 CCH Whole Ball of Tax
Release (3) | Back to WBOT

2014 CCH Whole Ball of Tax

Contact:
Eric Scott , 847-267-2179, eric.scott@wolterskluwer.com
Brenda Au , 847-267-2046, brenda.au@wolterskluwer.com

New Tax Season, New Developments: Key Changes Taxpayers Need to Know from Wolters Kluwer, CCH

(RIVERWOODS, ILL., January 2014) – Several changes are in store for many preparing returns for the new tax season. Some may be impacted by legislation signed into law in 2013, including the American Taxpayer Relief Act (ATRA) of 2012, new provisions of the Affordable Care Act (ACA and also known as “Obamacare”) and the Supreme Court’s decision to strike down a portion of the Defense of Marriage Act (DOMA), leading to significant changes by the Internal Revenue Service (IRS) which will begin recognizing same-sex married couples officially as married for federal tax purposes.

“New laws, as well as tax provisions that expired at the end of 2013, may make a noticeable impact for some taxpayers, depending on their income levels and other factors,” said Wolters Kluwer, CCH Principal Federal Tax Analyst, Mark Luscombe, JD, LLM, CPA. “Without the deadline-rush negotiations by Congress we saw last year to avoid the ‘fiscal cliff,’ taxpayers have a lot more up front information this year to prepare returns and take advantage of eligible tax breaks.”

CCH, a part of Wolters Kluwer and a leading global provider of tax, accounting and audit information, software and services (CCHGroup.com), lists key developments to know before filing returns in 2014:

Need to Know Checklist:

___ Tax season delayed until January 31 – The IRS announced in December that it would not start processing individual returns until Friday, January 31, because of time lost for updating systems during the 16-day partial government shut-down last October. Business tax returns began being accepted on the 13th. The April 15th filing deadline day remains in effect.

___ New health care related taxes – Two new terms taxpayers will be getting familiar with are the 3.8-percent Net Investment Income (NII) Tax and the 0.9-percent Additional Medicare Tax (applying to earned income – single filers earning $200,000 and $250,000 for married, joint return filers). The IRS issued final guidance on both late last year (outlined in this December 2013 CCH Tax Briefing). Each tax is designed to fund different areas of health care reform – based on income thresholds.

___ DOMA, Married tax status changes – For the first time, the IRS will recognize all legally married same-sex couples throughout the nation as “married” for tax filings, whether or not they live in jurisdictions that recognize same-sex marriage. Previously, same-sex married couples could file under the married status in certain states, but not for federal tax returns. In-depth details are in this September 2013 CCH Tax Briefing.

___ Alternative Minimum Tax (AMT) changes – After years of temporary patches to help middle-income earners avoid the AMT, the AMT exclusion amount was increased in 2013 and permanently indexed for inflation.  AMT exclusion amounts for 2013 tax year filings are $51,900 for individual taxpayers, $40,400 for married couples filing separately and $80,800 for married filing jointly.

___ Bush-era tax cuts expire for high-income earners – Many of those who were previously in the 35-percent tax bracket will see their top tax rate on ordinary taxable income over $400,000 for single filers and $450,000 for married, joint return filers increase to 39.6 percent. The top tax rate on long-term capital gains and dividends also rises from 15 to 20 percent for those same taxpayers.

___ State sales vs. state income tax deduction expires – Previously, taxpayers who itemized deductions could claim their total state income or state sales taxes from their federal tax return – depending on which provided the better tax benefit, but not both. With the provision now expired, those living in states without an income tax can no longer deduct sales taxes starting in 2014.

___ Education tax breaks made permanent – Interest deductions for qualifying student loans as well as employer-provided education assistance benefits are now permanent.  Provisions in place for Coverdell Education Savings Accounts are also permanent. One exception is the tuition deduction which expired after 2013.

___ Internet, e-commerce state sales taxes – Despite Senate passage of The Marketplace Fairness Act, reported in this May 2013 CCH Tax Briefing, designed to protect “bricks and mortar” retailers charging state sales taxes from competition waged by online sellers, such as Amazon, that had not been charging sales taxes on all orders, the bill remains in the House. For now, certain states have or are considering their own rules regarding sales tax collections on e-commerce purchases, updated in this CCH Map of State Sales and Use Online Tax Laws.

___ Higher Estate, Gift Tax Exclusion Amounts – The tax-exempt threshold value on estates of those who die in 2014 and for gifts made increases to $5,340,000 – up $90,000 from last year. The same amount also applies to the Generation-Skipping Transfer (GST) tax exemption. Now, estates, lifetime gifts and GSTs of $5.34 million or lower are not subject to taxes.

___ New Personal Exemptions, Standard Deductions – For the current tax season, the inflation-adjusted personal exemption amount that taxpayers can claim on Form 1040 is $3,900 – up $100 from last tax season. The personal exemption works like a tax deduction and enables qualifying taxpayers to claim the amount and lower their taxable income. However, those who are claimed as a dependent by another taxpayer are not eligible for a personal exemption.

Standard deductions for 2013 tax filings are:

  • Single or Married and filing separately – $6,100 (up $150)
  • Head of household – $8,950 (up $250)
  • Married and filing jointly and qualifying widow or widower – $12,200 (up $300)
  • Qualifying dependent – Greater of either $1,000 (up $50) or $350 plus dependent’s earned income up to $6,100.

IRS guidelines apply for qualifying children and qualifying relatives who may be claimed as dependents. Taxpayers may also be eligible for additional tax credits related to their qualified dependents, such as the child and dependent care tax credit.

A short video interview with Mark Luscombe discussing further details about tax changes for 2013 returns is available by visiting this web link.

About CCH, a part of Wolters Kluwer

CCH, a part of Wolters Kluwer (CCHGroup.com) is a leading global provider of tax, accounting and audit information, software and services. It has served tax, accounting and business professionals since 1913. Among its market-leading solutions are The ProSystem fx® Suite, CCH Axcess™, CCH® IntelliConnect®, Accounting Research Manager® and the U.S. Master Tax Guide®. CCH is based in Riverwoods, Ill. Follow us on Twitter @CCHMediaHelp. Wolters Kluwer (www.wolterskluwer.com) is a market-leading global information services company. Wolters Kluwer is headquartered in Alphen aan den Rijn, the Netherlands. Its shares are quoted on Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices.

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