Archive for the ‘General Taxation’ Category

Tax Extenders Law Signed

December 20, 2014

On December 19, President Obama signed the law passed by the lame duck Congress to extend expired tax provisions through the end of 2014. As previously reported, the law retroactively restores provisions that expired at the end of 2013, such as the deduction for state and local sales tax. These provisions are extended only through the end of 2014, so further action from the new Congress will be necessary to make them available in 2015 or later years.

The legislation also includes technical corrections to earlier legislation and provisions making it possible for states to offer ABLE accounts, similar to 529 accounts but used to cover expenses of certain individuals with disabilities.

New Rule for 529 Account Investments

December 17, 2014

College savingsThe college savings plans known as 529 accounts have advantages but also some disadvantages, including a rule that restricts how often you can change your investments. The tax law passed by Congress at the end of its 2014 lame duck session includes a provision that loosens up that restriction as of 2015.

details: Changing 529 Account Investments

2014 Tax Extenders Move

December 4, 2014

Seal of the U.S. CongressUpdate: The Senate passed this bill on December 16, sending it to President Obama for his signature.

It’s not a done deal yet, but Congress appears to be heading toward a one-year extension, through 2014, of various tax provisions that expired at the end of 2013. Many extenders are included in various categories including business and energy. Here are the extenders for individuals:

  • Tax-free distributions from IRAs for charitable purposes
  • Deduction of state and local sales tax
  • Above-the-line deduction for qualified tuition
  • Mortgage insurance premiums treated as interest
  • Parity for employer-provided mass transit and parking
  • Exclusion of income from discharge of certain mortgage debt
  • Contributions of real property for conservation purposes
  • Deduction for certain teachers’ expenses

The House passed the bill 378-46 but the Senate has yet to act and the Senate has now passed it as well.

Big Change in the 401k Rollover Rules

September 23, 2014

We don’t often get a change this big in an area as important as 401k rollovers. The IRS released guidance completely revising the way we treat rollovers when your 401k or similar account includes after-tax dollars. Ed Slott, author of Ed Slott’s 2014 Retirement Decisions Guide, praised the guidance, saying, “The IRS has made it easier for many people to make their retirement savings more tax-efficient.”

What’s the big deal? Previously it was difficult to separate pre-tax dollars from after-tax dollars when taking money from an employer plan. Now it’s a snap, which means you can send pre-tax dollars to a traditional IRA for a tax-free rollover while sending after-tax dollars to a Roth IRA for a tax-free conversion. This is a big win for people with retirement savings. Use the link below for a full explanation

details: Isolating Basis for a Roth Conversion

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%.

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.

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Roth Guide Updated

December 22, 2013

Roth retirement accountsOur free online guide to Roth retirement accounts has been fully updated. This extensive guide offers much of the information covered in Go Roth!, our book on the subject.

details: Roth IRA and Other Roth Retirement Accounts

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.

Inflation Adjustments for 2014 Tax Numbers

September 21, 2013
By Kaye A. Thomas

The August inflation numbers are out, and that means it is now possible to determine the 2014 amounts for many of the tax numbers that are adjusted each year for inflation. Among the numbers affected are the size of the income tax brackets, personal exemptions, and the income levels where various tax benefits begin to phase out. The IRS usually waits at least a few weeks before announcing these numbers, but we’ve done our own calculations, which are available in our Reference Room.

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Key Tax Question on Gay Marriage

August 5, 2013
By Kaye A. Thomas

Update: The IRS has issued a ruling that addresses the most important issues discussed in this post. We’ll have detailed guidance in the near future but for now here are the main points:

  • For federal tax purposes, the IRS will treat same-sex couples as married if the marriage occurred in a state or country where such marriages are legal, even if they live in a state that doesn’t recognize such marriages.
  • IRS will not require couples to amend prior year returns, but couples are permitted to do so if an amended return would produce a refund for a year when they were married but required to file single, provided that year is still open under the statute of limitations.
  • Civil unions, domestic partners and similar relationships will not be treated as marriages.

More to come.


The Supreme Court’s decision in Windsor to overturn the Defense of Marriage Act raises many complicated tax issues. One of the most important is whether the marital status of same-sex couples will be determined based on the state of celebration or the state of residence. What happens if a couple has been married in a state where same sex-marriage is legal but now resides in a state where such marriages are not recognized? (more…)