Picture of Doris
 
In This Issue
IRA Rollovers
ACA Income Tax Impacts
New ABLE Accounts
1099 Reporting
Tax Image
NEW 2015
401(k) and Pension Limits
  • The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans and the federal government's Thrift Savings Plan is $18,000 - up $500 from 2014.
  • The catch-up contribution limit for employees aged 50 and over who participate in these plans is $6,000 up $500 from 2014.
  • The limit on annual contributions to an Individual Retirement Arrangement (IRA) is $5,500 - unchanged from 2014 and the additional catch-up contribution for individuals 50 and over remains unchanged at $1,000.
  • The limitation for defined contribution plans  is increased in 2015 from $52,000 to $53,000.
  • The annual compensation limit is increased from $260,000 to $265,000.

    • 2015
    Standard Mileage Rates:      

     

    Per Mile

     

    Business: $0.575

     

    Medical / Moving: $0.23

     

    Service of Charitable Organizations: $0.14


    House for Sale

    Did you move or

    change your email address in 2014?

     

    Call or email the office and let us know!
    January, 2015 Newsletter

    Greetings! 

     

    Happy New Year! Welcome back for another fun and exciting income tax season (nothing like the power of a little positive persuasion)! As you can see in the new letterhead above, Doris B. Cloud, CPA is now Cloud CPA Firm, LLC. While the name has changed, the people are still the same. The new firm reflects that Paul is an owner and remains an integral part of the tax practice. He will offer limited financial planning services. A number of you met Paul last year. For those who did not, he is an Enrolled Agent, the highest credential the IRS awards; like attorneys and CPAs, Paul has unlimited practice rights before the IRS. Patty Baron and Leszlie Nedelka are still an important part of the firm and you will likely talk to one of them in the coming weeks.

    IRA Rollover Rules Updated

     

    A law limits the number of IRA rollovers that can be made in any 1-year period to one. Earlier, the Tax Court held that the limit applies to all of an individual's IRAs even though the IRS had stated that the limit applies to each separate IRA an individual owns. Shortly after this decision, the IRS announced that it will adopt the more restrictive view for distributions after 2014. Then, in November, the IRS issued more guidance to clarify the start of the new policy. As clarified, an individual receiving an IRA distribution on or after January 1, 2015 cannot roll over any portion of the distribution into an IRA if the individual has received a distribution from any IRA in the preceding 1-year period that was rolled over into an IRA. However, as a transition rule for distributions in 2015, a distribution occurring in 2014 that was rolled over is disregarded for purposes of determining whether a 2015 distribution can be rolled over, provided that the 2015 distribution is from an IRA that neither made nor received the 2014 distribution. 

    Health Care Impacts 2014 Income Tax Returns

    The IRS has provided details on how health care reform under the Affordable Care Act (ACA) affects the upcoming income tax return filing season. The most important ACA tax provision for individuals and families is the premium tax credit. Under another key provision, individuals without coverage and those who don't maintain coverage throughout the year must have an exemption or make an individual shared responsibility payment. The IRS stresses that most people already have qualifying health care coverage and will only need to check a box to indicate that they satisfy the individual shared responsibility provision when they file their tax returns. Individuals and families who get coverage through the Health Insurance Marketplace (Marketplace, also known as an exchange) may be eligible for the premium tax credit. Eligible individuals and families can choose to have advance credit payments paid directly to their insurance company to lower what they pay out-of-pocket for their monthly premiums. Early in 2015, individuals who bought health insurance through the Marketplace will receive Form 1095-A, Health Insurance Marketplace Statement, which includes information about their coverage and any premium assistance received. Form 1095-A will help individuals complete their return. Individuals claiming the premium tax credit, including those who received advance payments of the premium tax credit, must file a federal income tax return for the year and attach Form 8962, Premium Tax Credit.

    New Tax-Advantaged ABLE Accounts.
    A new law allows states to establish tax-exempt "Achieving a Better Life Experience" (ABLE) accounts, which are tax-free accounts that can be used to save for disability-related expenses. They can be created by individuals to support themselves or by families to support their dependents. Assets can be accumulated, invested, grown and distributed free from federal taxes. Contributions to the accounts are made on an after-tax basis (i.e., contributions aren't deductible), but assets in the account grow tax free and are protected from tax as long as they are used to pay qualified expenses. Withdrawals are tax-free if the money is used for disability-related expenses including: education; housing; transportation; employment support; health, prevention, and wellness costs; assistive technology and personal support services. A nonqualified distribution is subject to income tax and a 10% penalty on the part of the distribution attributable to earnings. Each disabled person is limited to one ABLE account, and total annual contributions by all individuals to any one ABLE account can be made up to the inflation-adjusted gift tax exclusion amount ($14,000 for 2015).
     Business & Rental 1099 Reporting
    • If you own a business or have rental property, be prepared to answer the following questions on your tax return:
      • Did you make any payments in 2014 that would require you to file Form(s) 1099?
      • If "Yes", did you or will you file all required Forms 1099?
    • What this means is the IRS is cracking down on those who should be reporting payments on 1099s and are not.
    • As a reminder, 1099s should be issued to non-corporations / individuals who provide $600 or more in services to your business. For example, payments for services performed for a trade or business by people not treated as its employees such as a plumber, lawn service or an interior decorator.
    • You can file these 1099s on your own or my office can help.
    • Also, you may receive a Form 1099-K from your credit card processing company. The purpose of this form is to facilitate tax return reporting of both credit card and cash receipts for all businesses.This includes rental businesses.

    The Internal Revenue Service has announced that the tax season will open on time January 20, 2015.

     

    Our office will be sending the tax organizer packages in the next week. You will either receive a paper organizer or email / web organizer depending on your previously indicated preference.

     

    Also contact the office if you have a change of email or physical address. As always, we are honored to handle your tax and accounting matters. Thank you for your business! 

     

    Sincerely,

     
    Doris Cloud  and Paul Cloud

     

    This newsletter is for general guidance only, and does not constitute tax advice or professional consulting. Before any action, consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information.