Archive for the ‘News’ Category

Inflation Adjustments for 2016

November 22, 2015

We’ve posted inflation-adjusted figures for 2016 (tax rate schedules, tax figures adjusted for inflation, retirement account and HSA figures) in our Reference Room.

The period used for these adjustments (September 2014 through August 2015) saw one of the smallest changes since we began using inflation-adjusted figures in the 1980’s, second only to the period used for the 2009 adjustments, when we were in an economic meltdown. Prediction: those who have been complaining for years that Federal Reserve policies are going to lead to high inflation will continue complaining.

Most of the tax figures we tend to watch closely (contribution limits for IRAs and 401k accounts, the gift tax exemption amount) remain unchanged. The personal exemption amount was previously so close to an adjustment that this year’s boost of less than half of 1% was enough to push it from $4,000 for 2015 to $4,050 for 2016.

Domestic Partnership Won’t Be Treated as Marriage

October 22, 2015

The Treasury has issued proposed regulations reflecting the Supreme Court’s decisions concerning same-sex marriage (Windsor, which struck down relevant parts of the Defense of Marriage Act, and Obergefell, which requires all states to permit and recognize same-sex marriages. In essence, the regulations treat same-sex marriage the same as the marriage of a man and a woman for federal tax purposes. However, registered domestic partnerships, civil unions, and other similar relationships will not be treated as marriages for federal tax purposes. Reproduced below is the explanation of this point offered in the preamble of the proposed regulations. (more…)

July Law Contains New Tax Compliance Rules

August 22, 2015

Seal of the U.S. CongressJust as highway funds were set to run out, Congress passed a highway bill and President Obama signed it into law July 31, 2015. To pay for the bill without raising tax rates, Congress included some new compliance provisions that will affect some recipients of inherited property, owners of partnership interests, and taxpayers with mortgages.

details: Surface Transportation Act of 2015

Inflation Adjustments for 2015

September 22, 2014

inflation-rate-of-changeThe August inflation numbers, which came out September 17, are the last ones needed to adjust most of the tax figures that change annually, including the tax rate schedules. The IRS hasn’t published the adjusted figures, but we “did the math” and updated our Reference Room to give you an advance look at the 2015 numbers. Highlights include an increase in the personal exemption amount from this year’s $3,950 to a round $4,000. The IRA contribution limit (under age 50) will remain at $5,500. (The 401k contribution limit depends on September inflation numbers, so that information isn’t available yet.) The annual gift tax exclusion amount will be unchanged at $14,000.

Inflation for the twelve-month period ending in August was 1.7%.

Interpretation of Stock Vesting Rule

January 5, 2014

Compensation in stock and optionsThe Tax Court recently rejected an IRS attempt to treat stock as vested based on a provision in the regulations dealing with termination for cause. The court found that the employment agreement used the word “cause” with a different meaning than in the regulation.


Clergy Housing Allowance Exemption Unconstitutional

December 30, 2013

Court rulingsSection 107 of the Internal Revenue Code provides a tax exemption for a housing allowance provided to a “minister of the gospel.” In a decision virtually certain to be overturned, a federal judge has found the exemption unconstitutional.


IRS Announces Tax Season Start Date

December 22, 2013

Filing your taxesThe IRS has announced that it will begin accepting 2013 income tax returns on January 31, 2014. Here’s what’s strange about that particular date.


Standard Mileage Rates for 2014

December 6, 2013

The IRS is out with the standard mileage rates for 2014. Here are the main points, quoted from the IRS announcement:

Beginning on Jan. 1, 2014, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 56 cents per mile for business miles driven
  • 23.5 cents per mile driven for medical or moving purposes
  • 14 cents per mile driven in service of charitable organizations

The business, medical, and moving expense rates decrease one-half cent from the 2013 rates.  The charitable rate is based on statute.

Waiting for Regs on Net Investment Income Tax

November 7, 2013

This is the first year of the Medicare tax on net investment income, and we’re still waiting for final regulations, which are promised by the end of the year. This tax will cause taxpayers with income above a threshold amount to pay an additional 3.8% tax, on top of regular income tax and/or alternative minimum tax (AMT), on net investment income, including dividends, interest and capital gains. Recent remarks by a Treasury official indicate that the final regs will fix a glitch in the taxation of traders that appeared in the proposed regs, but the official declined to specify how that fix would work. Meanwhile, the IRS has posted a draft of Form 8960, Net Investment Tax (PDF), but don’t expect to learn much by reviewing it. Nearly every line of the form includes the words, “see instructions,” but instructions are not included in the draft. Reason? IRS can’t issue instructions indicating what the regs say until the regs are issued.

Extenders: Baucus Balks

September 23, 2013

Senator Max Baucus of Montana, chairman of the Senate Finance Committee, says he’s had it with extenders. These are tax benefits that have expiration dates but regularly get renewed, usually for a period of just a year or two. Individuals rely on a number of these, such as the itemized deductions for state and local sales tax and private mortgage insurance (PMI). Several of them are important to businesses as well.


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