We welcome you to the Year 2015.
We are all aware that the IRS has opened up its system to start accepting our 2014 Tax Returns; we should have also started receiving our W-2s and other earned Income Statements. Even if you don't intend to file right away, you can start gathering your receipts, Bank Statements and other important documents.
It is important to know that Tax Preparation Could be a little more complicated this Year, Thanks to the New Standard Deduction Amounts and the Affordable Care Act. We have compiled the following information, for you to take note, while filing your 2014 Tax Return:
1) You need to decide which type of Deduction, you want to take: You have to compare and decide, whether you want to itemize your Deductions or take the Standard Deduction. Your itemized Deductions are the items, you paid for during the year 2014, and you may be able to deduct. Expenses could include Home Mortgage Interest, State Income Taxes or Sales Taxes (But not both), Real Estate and Personal Property Taxes and Gifts to Charities. They may also include Large Casualty or theft losses or Large Medical and Dental expenses, that insurance did not cover. Unreimbursed Employee Business Expense may also be deductible.
In most Cases, Your Federal Income Tax will be less, if you take the larger of your itemized Deduction or Standard Deduction.
2) If you choose not to itemize, your Basic Standard Deduction amount depends on your Filing Status. For the 2014 Tax Returns, the Basic Amounts are:
3) As a Business Owner, if you choose to itemize your Deductions, your Expenses must be Ordinary and Necessary. An Expense is 'ordinary', if it is customary and conventional for the tax Payer's line of Business. A Necessary Expense is helpful in the Tax Payer's Business, but it need not be indispensable.
4) The Standard Mileage Rate for each Business Mile driven is 56cents for the Year 2014, and rises to 57.5 cents for the Year 2015. To Claim Deduction for the Business Use of your Car, it is better to use the Standard Mileage Rate, rather than the Actual Costs.
5) As a Business Owner, you need to take note of the following Expense Treatment during the Year, so that you can reduce your Tax Liability:
6) This will be the first Filing Season with Two Major Provisions from the Affordable Care Act on Form 1040.They are the Premium Tax Credit and the Individual Shared Responsibility Payment on Form 1040.
7) The Premium Tax Credit is a refundable Tax Credit, which is also advanceable, designed to help Eligible Individuals and Families with low or Moderate Income, so that they can afford and purchase Health Insurance through the Health Insurance Marketplace. You can claim the Credit, when you file your Taxes, and this will lower your Tax Liability or you can choose to increase your Returns.
8) The Individual Shared Responsibility Payment on Form 1040 is the Fine payment that you make with your 2014 Tax Returns, for not having Health Insurance Coverage. It is the greater of :
9) Tax Payers will need a Form from the Market Place, called Form 1095- A, to complete their Tax Return. The Forms should arrive by Mail by the End of January or First Week in February and can also be downloaded from the MarketPlace Account. You are advised to wait for the Form 1095-A to arrive, before you file your Taxes.
10) Small Employer Health Insurance Credits: An Eligible Small Business Employer may claim Tax Credit, if it makes nonelective contributions that pay at least one-half of the cost of Health Insurance Premiums for the coverage of its participating Employees. An Employer Contribution is considered a nonelective contribution, as long as it is not made through a Salary reduction arrangement, and is done on behalf of each employee, who enrolls in a Qualified Health Plan, offered by the Employer.This Credit is computed on Form 8941 and is claimed as a component of the General Business Credit.
We have complied these Basic Information, to enlighten you about the latest Tax Changes, and prepare you to get ready for the 2015 Tax Filing Season. Remember, if you are fully prepared, it will save you time and help ensure that you receive all the Tax Benefits, Credits and Deductions Allowed.
We know that Every Business is unique and the Basis of ensuring a correct Tax Liability is having a Good Record Keeping System. If you will need assistance in setting up your Record Keeping System to reflect your correct Tax Deduction. Please feel free to call us to help you out.
You will be glad you did.