Friday, October 17, 2014

Filing 2014 Taxes: Your Go-To Guide

Deadline for filing and paying your taxes
There is one key piece of information that every taxpayer — especially those who will be filing at the last minute — should keep in mind as April 15, 2014 draws near:
The deadline for filing 2014 returns is midnight on April 15, 2015.
The April 15 deadline applies to any return or payment normally due on April 15. It also applies to the deadline for requesting an individual return tax-filing extension and for making 2014 IRA contributions.
It would be simple if that were the only change in taxes this year. But, this year, as always, there are additional changes you need to be aware of as you prepare your income taxes. 

 The deadline for filing 2014 returns is midnight on April 15, 2015.

Cost-basis reporting no longer up to the taxpayer
Starting back with the 2011 tax forms, brokers or custodians of a person’s assets began tracking and reporting to the IRS the cost basis of those investments. In the past, it was up to the taxpayer.
The federal government established new tax reporting requirements with the Emergency Economic Stabilization Act of 2008, said financial adviser J. Mark Nickell of Brentwood, Tennessee-based J. Mark Nickell & Co. Its purpose was to get investors to accurately report on tax forms any gains and losses on securities. The changes will eventually simplify tax preparation for investors, Nickell said.
The effects of this legislation will emerge in phases through 2014. For tax year 2012, custodians started reporting costs on covered and non-covered securities. For 2012, they also reported costs involved with mutual funds, exchange-traded funds and dividend reinvestment plans. In 2013, they started reporting on fixed-income options and other securities.
“In the past, the custodians of your assets reported how much a sale was for, but they wouldn’t have listed the cost basis,” said financial planner Chris Walker, also of Brentwood-based J. Mark Nickell & Co. “It was up to the taxpayer to dig through their records, sometimes going back years to find out how much they paid for it.”
Standard mileage rates down
The standard mileage rate for  business use of a car, van, pick-up or panel truck   has decreased to 56 cents for 2014. If  the vehicle is operated for medical reasons or as part of a deductible move, the rate is 23.5 cents a mile for 2014. The rate for using a vehicle to provide services to charitable organizations remains at 14 cents a mile.
Homebuyer credit restriction and repayment
The first-time homebuyer credit remains available only for those individuals who were in the military, were employed by the Foreign Service, or were part of the intelligence community and in one of those capacities were stationed outside the United States for at least 90 days between Dec. 31, 2008, and May 1, 2010 — not including those dates.
If you claimed the first-time homebuyer credit for a home bought in 2008 you must generally make the sixth of 15 annual repayment installments on your 2014 return.  Separately, a repayment requirement also applies where you purchased a home and claimed the credit on a prior year return and then sold it or stopped using it as a main home in 2014.
The focus in "1040 Instructions 2014" on line 67 of Form 1040 provides additional details.
Exemptions, savings accounts for medical, and capital gains/losses
The amount for personal exemptions has increased from $3,900 in 2013 to $3,950 in 2014.
The additional tax on distributions from health savings accounts (HSA) not used for qualified medical expenses has increased to 20 percent, and payments for medicine are now considered qualified medical expenses only if the medicine is a prescribed drug or insulin.
In most cases, taxpayers will now use the new Form 8949 to report capital gain and loss transactions.Schedule D, the form traditionally used to show these individual transactions, is now used as a summary sheet, reporting amounts for total sales price, basis and other adjustments for all individual transactions, and for figuring the tax.
Health insurance deductions
Eligible self-employed individuals may take a self-employed health insurance deduction in 2014. This deduction may be used not only for health insurance premiums that cover the filer, but also for spouses and other dependents as well as non-dependent children under the age of 27.