Archive for the ‘General Taxation’ 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…)

Medicare Bombshell?

September 15, 2015

logo_medicareIf published reports turn out to be accurate, it seems likely we’ll be hearing plenty about this in the coming months. A quirk in the rules for Medicare Part B may result in a huge jump in costs — but only for 30% of enrollees.


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

A Tax-Free Fringe You Hope You’ll Never Need

August 13, 2015

Internal Revenue ServiceImagine this. A hacker breaks into the computer system of the company where you work and downloads employee data, including your social security number and date of birth. The company announces that they’ll pay for identity protection services for the employees, but then some wise guy says hey, isn’t that a taxable fringe benefit? Doesn’t the company have to include the value on the employee’s Form W-2, forcing the employee to pay tax on this amount?

Fortunately, the wise guys at the IRS say no. The employer doesn’t have to report this item on Form W-2 (or, for non-employees, on Form 1099-MISC), and the employee doesn’t have to report it on his or her tax return. And the same is true if you received identity protection services from a company where you shopped, if it’s provided because of a data breach. This rule doesn’t apply if you receive these services for reasons other than a data breach, or if you receive cash in lieu of such services.

details: IRS Announcement 2015-22 (PDF)

TurboTax Apology 2.0

January 29, 2015

Form 1040After getting an earful (and then some) from their customers, the folks at Intuit have come up with a new, improved apology for the mess they created in disabling features in some versions of their products, forcing many of their customers to buy a more expensive version. While they’ll need a few days to roll out the new approach, they say it will include three features:

  • For this year, a free upgrade “within the product” for people who buy the desktop version of TurboTax Deluxe but need TurboTax Premier because they removed capabilities from the lower-priced product.
  • People who already paid for the upgrade can claim the rebate described earlier up until April 20.
  • For next year and presumably thereafter, the capabilities removed from the Deluxe version will be restored.

Details haven’t been provided, so it’s unclear if any of the numerous limitations listed in our previous article will be lifted. In particular, we wonder whether these forms are being restored only to the desktop version of TurboTax Deluxe. Some 80% of TurboTax customers use the online version, but for some reason there was little outcry when similar changes were made to that version a year earlier.


Internal Revenue But No Service

January 15, 2015

By Kaye A. Thomas
Current as of January 15, 2015

The Taxpayer Advocate has released a depressing report.

Internal Revenue ServiceTaxpayer service levels at the IRS have been declining for the last ten years. In 2004, the IRS answered 87% of calls from taxpayers seeking assistance, with an average hold time of 2½ minutes. On its toll-free lines and in roughly 400 walk-in sites, taxpayers received help on a wide range of tax questions. Tax return preparation assistance was provided to hundreds of thousands of taxpayers, many of them low-income, elderly or disabled. Here is what we can expect for 2015:


Stock Acquired from Your Spouse

January 9, 2015

Taxation of InvestorsThe rule for determining the basis of stock you acquire from a spouse, whether by gift, purchase, or divorce settlement, is simple and, to many people, surprising. Gifts don’t follow the usual rule for gifts. As for what happens when you buy stock (or anything else) from your spouse (or from your former spouse as part of divorce proceedings), you may find the result hard to believe.

details: Acquiring Stock from Your Spouse

Eager to File?

December 29, 2014

Filing your taxesCountdown to tax season: The IRS has announced that it will begin accepting electronic returns, and begin processing paper returns, January 20.

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.

details: Tax Increase Prevention Act of 2014

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