Sunday, February 15, 2015

Reporting Changes For 2014 Individual Tax Returns - IRS Fact Sheet


So Valentine's Day was here and left- that could only mean one thing - we are into the 3rd serious week of tax season! The Internal Revenue Service got out it's fact sheet about the changes in reporting requirements for individuals. I thought for all those self-preparers, this would be a good tool to look at and see if this is the year you want to make the leap & have your taxes examined by a tax professional, especially an Enrolled Agent! 

  • THE AFFORDABLE CARE ACT (ACA):   
The ACA Act says that a taxpayer and each member of his family when filing his federal income tax return, must either 
  • Have qualifying health coverage for each month of the year; 
  • Qualify for an exemption;
  • Make an individual shared responsibility payment 
Some moderate-income taxpayers may also qualify for financial assistance to help cover the cost of health insurance purchased through the Health Insurance Marketplace. 

You would be categorized as one of the following:

A. Check the box- Simply check the box on the tax return that each member of your family had qualifying health coverage throughout the year. You can use a chart on IRS.gov to find out if your coverage counts as "qualifying coverage".

B. Exemption -  You may be eligible to claim an exemption from the requirement to have coverage. Eligible taxpayers need to complete the new IRS Form 8965, Health Coverage Exemptions, and attach it to their tax return. 

C. Individual shared responsibility payment: If you do not have qualifying coverage or an exemption for each month of the year, you will need to make an individual shared responsibility payment with your return for choosing not to purchase coverage.

D. Premium tax credit (PTC): If you bought coverage through the Health Insurance Marketplace, you should have received Form 1095-A, Health Insurance Marketplace Statement, from the Marketplace by early February. If you haven't received this yet- contact the Marketplace and not the IRS for that information. 

You will also need to reconcile your advance payments to the amount of your PTC on Form 8962 with the amount of your actual income.



  •  RENEWAL OF TAX BENEFITS: Benefits that had expired for 2013 and were renewed for 2014 are: 
                  # Deduction for state and local sales taxes claimed by taxpayers who itemize their deductions on schedule A. 

                 # Educator Expense Deduction claimed as an adjustment to your income on Form 1040 Line 23 by eligible teachers. 

                 #  Qualified Charitable Distributions by IRA owners age 70 1/2 or older.  

                 # Non-business Energy Credits claimed on Form 5695 

                 # Tuition & Fees Deduction claimed on Form 8917

  • ONE-ROLLOVER-PER-YEAR LIMIT FOR IRA OWNERS: 
Under the new rule, an IRA owner can make only one rollover from an IRA to another (or the same) IRA in any 12-month period, regardless of the number of IRAs he or she owns. 

The limit will apply by aggregating all of an individual's IRAs, including SEP and SIMPLE IRAs as well as traditional and Roth IRAs, effectively treating them as one IRA for purposes of the limit.

While this rule only begins to apply in 2015, it could affect taxpayers' actions with respect to their IRAs and their 2014 returns. There is a 2015 transition rule that ignores some 2014 distributions.



  • FORM 8891 FILING REQUIREMENT ELIMINATED: 
If you have either one of the 2 popular Canadian Retirement plan, the Registered Retirement Savings Plans (RRSPs) or Registered Retirement Income Funds (RRIFs), you know that you had a special annual reporting requirement on the Form 8891. This requirement has now been eliminated. 

Please note that this does not change your reporting requirements under FATCA or on the Form 8938, if those thresholds applied to these Canadian retirement accounts.   



  • NEW WAY TO MAKE TAX PAYMENTS:
IRS Direct Pay, which debuted during last year's tax-filing season, allows individuals to pay their tax bills or make quarterly estimated tax payments, directly from checking or savings accounts without any fees or pre-registration. 



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As always, read my disclaimer here. Please consult a qualified tax professional for your unique tax needs. More of my contact information is on my website, www.mntaxsolutionsllc.com.