Accounting Today “In the Blogs” visitors: the tax and AMT article is here. You may also be interested in these thoughts on when prepaying tax is unwise, even without AMT.
Now that you’re done with 2014 year-end tax planning, let’s get started on 2015. Procrastination is as human as liking sugar and shiny things. It’s natural to get serious about anything right at the deadline, whether it’s homework or tax planning.
But it’s often wiser to get started early. That’s especially true when looking at contributions to tax-advantaged savings accounts. You should look to fund these as soon as you can, rather than putting them off to the last minute. The sooner you fund your 2015 IRA, your Health Savings Account, or your Section 529 education savings account, the sooner your funds are earning their return tax-free.
So if you have the funds on hand, here’s a new year’s resolution to keep today — fully fund your tax-advantaged savings accounts. Your limits for 2015:
- Individual Retirement Account: lesser of earned income or $5,500; if you will be 50 or over by year-end, the limit $6,500. This applies whether your IRA is a Roth IRA or a traditional IRA, but Roth IRAs have additional limits that disqualify higher income taxpayers.
- Health Savings Accounts for qualifying taxpayers with single coverage can be funded up to $3,350 for 2015. For taxpayers with family coverage, the limit is $6,650. Read more here.
- Section 529 plans have more flexible limits. The IRS explains:
Contributions can not exceed the amount necessary to provide for the qualified education expenses of the beneficiary. If you contribute to a 529 plan, however, be aware that there may be gift tax consequences if your contributions, plus any other gifts, to a particular beneficiary exceed $14,000 during the year.
Taxpayers filing in Iowa can deduct their contributions to the College Savings Iowa Section 529 plan up to $3,163 per beneficiary, per donor on their Iowa income tax return. A married couple funding plans for their two children can therefore deduct up to $12,652 in 2015 CSI contributions.
A new fraud trial for a Nebraska filmmaker accused of using a fake purchase agreement to get tax credits should be delayed because two elderly witnesses have left Iowa for the winter, according to a prosecutor handling the case.
Yes, it’s cold here. We’re supposed to get a snowstorm today, and it’s supposed to be 1 on Wednesday. For a high temperature. And I can’t say I have a great deal of sympathy for somebody who got millions in tax credit money.
But a criminal trial is serious business, and the film scandal has been going since 2009. The prosecution says the witness is worried that he might fall. I think arrangements can be made to get him safely from the car.
What’s the case about?
Dennis Brouse, 64, has been waiting for a second trial after judges on the Iowa Court of Appeals overturned a felony fraud conviction against him in April. Brouse’s company, Changing Horses Productions, received $9 million in tax credits from Iowa’s scandal-ridden film tax credit program.
Brouse faces a single fraud charge and potentially a prison sentence, stemming from the purchase of a 38-foot camper trailer he bought from Prole couple Wayne and Shirley Weese. Prosecutors say Brouse paid the couple $10,500 in cash for the trailer, but he claimed it cost twice that amount in a statement for tax credits given to the Iowa Film Office.
The state auditor’s report on the Iowa Film Office showed a lot of creative accounting for Changing Horses, including the claim of a $1 million expense for non-cash “sponsorship” considerations. I am guessing that they are going after the trailer case because there are e-mails from the Iowa Department of Revenue blessing the “in-kind” expense concept. I’m pretty sure that there is no such endorsement of doubling expenditures.
Roger McEowen, Top 10 Agricultural Law and Taxation Developments of 2014 (ISU-CALT). The impact of Obamacare is #1.
However, it’s also worth remembering that the penalty will be doubled (or more than doubled) for 2015. 2014’s penalty is $95 or 1% of your household income, whichever is higher. 2015’s penalty is $325 or 2% of your household income, whichever comes higher.
And the employer mandate? It’s the penalty on taxpayers with 100 or more “full-time equivalent” employees. A blog post can’t really do it justice:
The IRS has issued a truly epic 56-question FAQ to help explain the even-more-epic final regulations for the employer shared responsibility provision. In case you are wondering, those final regulations total to over seventy thousand words – similar in size to the novel Harry Potter and the Sorcerer’s Stone.
It will get more epic if the Supreme Court rules that the individual tax credit only applies in the 14 states that have established their own ACA exchanges. The employer mandate only applies if an employee has qualified for the credit, and the individual mandate penalty will not apply to taxpayers whose insurance becomes “unaffordable” if the credits go away.
Robert Wood, Think Filing Taxes Was Tough Before Obamacare? Just Wait. “This year for the first time, the Affordable Care Act has created a trickier tax season. It is more expensive too, as virtually all Americans filing tax returns will have to consider the law’s impact on them and their taxes.”
Annette Nellen, ACA – Affordability of health insurance and age
William Perez, Directory of tax extensions for each state
Russ Fox, 1099 Time (2015 Version). “It’s time for businesses to send out their annual information returns.”
Kay Bell, Cigarettes are a bigger state tax target than booze. I think that explains the hostility of state governments to e-cigs.
Peter Reilly, IRS Revokes Exempt Status Of Faux Veterans Groups
Renu Zaretsky, Cap and Trade Plans, Tax Deadlines, and Rate Drops. The TaxVox headline roundup covers gas taxes, dynamic scoring, and an insane plan in Washington state for a state-only “cap and trade” carbon program.
TaxProf, The IRS Scandal, Day 606
News from the Profession: Celebrate the New Year with Accounting Salaries Charted by Company Type, Role, Service Line and More (Adrienne Gonzalez, Going Concern)