Summer is coming to an end. There are still beach days ahead, but with each passing day that inevitable time is coming – tax season. There are other changes that are more general/business related and not directly affecting your bottom line. With that said, it’s never too early to consider some of the changes that 2014 will bring.
Health insurance tax penalty – From the Affordable Care Act, based on “adequate” insurance coverage, you could be penalized from $95 or 1% income in 2014, and by 2016 could be $695 or 2.5% of income, and then cost-of-living increases thereafter.
Health coverage tax credit – if health insurance was purchased through the Marketplace, health premium tax credits may be available.
Medical expenses – in 2013, deductibility of medical expenses on Schedule A was subject to a floor of 7.5% of AGI (Adjusted gross income) – in 2014 the floor increases to 10%. For those over 65 years old, the 10% doesn’t kick in until 2016.
Flexible Spending Account (FSA) carryover – up to $500 of unused amounts can be carried over.
The tuition deduction (could deduct between $2,000 and $4,000) and the health care coverage tax credit expired in 2013.
Homeowners lose the ability to deduct mortgage insurance premiums as interest in 2014.
The ability to exclude mortgage debt forgiveness granted by a bank has expired, thus will now be treated as taxable income.
Many energy tax credits have expire, such as windows, heating & cooling systems, and insulation.
Teachers lose the $250 deduction for unreimbursed educational expenses.
Home office deduction has been simplified.
Form 1023-EZ: “IR-2014-77, July 1, 2014 — The IRS today introduced a new, shorter application form to help small charities apply for 501(c)(3) tax-exempt status more easily.” – [per IRS website]
For Massachusetts taxpayers, go to the Mass DOR website at this address to see what changes are in store for 2014 –
If my research has yielded something incorrect, please do not hesitate to comment.