Tag: tax

What Do I Do If I Haven’t Received My Tax Refund?

June 5th, 2014 — 2:15pm

IRS Tax Refund 300x207 What Do I Do If I Havent Received My Tax Refund?

Follow These Steps To Track Your Refund

Filing your tax return was stressful, but now that it’s done you know the amount you’ve got coming and you can’t wait to get your hands on it. This is understandable; we all usually have that refund earmarked for something. That’s why it can be so frustrating when your tax refund doesn’t arrive on time. Read on to learn what to do if you’ve been waiting an exceptionally long time for your tax refund.

Gather Some Information

The first thing you should do when you have yet to receive your federal tax refund is to gather your social security number, filing status and the exact amount that you expect to get so you can check your return status online or over the phone. Having this information close at hand is necessary to start the process.

Check the Status of Your Return

It’s important to first check your return status before you check your refund status. You can do so over the phone or by logging in securely to your account on the IRS website. If you used an e-filing service to process your return, inquire about your status with that company. Many such services offer online log-ins where you can easily check your account. If you didn’t use an e-file service, you can call the IRS toll-free at 1-800-829-1040. If you are lucky to speak to an agent during your first call, hopefully they will be able to tell you if there was a delay, and what the cause was. Often, the return simply hasn’t been processed yet.

Once you’ve confirmed that your tax return has been processed, you can check your federal tax refund status. If you opted for a direct deposit into your bank account, call the bank and see if the check has been deposited. If it hasn’t, a quick way to check on your status is to use the Where’s My Refund? tool provided by the IRS and you can track where your refund is at any time. The site is updated every 24 hours in the evening, so you can start checking it the day after you e-file your return (or a month after you’ve mailed it in).  You can also call the IRS at 1-800-829-1954 to determine where your check is and why it’s taking so long.

Reasons for Delay

Tax season is a notoriously busy time for the IRS: people are filing taxes, refunds are being processed and issues are being sorted. If you wait to file close to the deadline of April 15th, you could wait longer than if you filed a month or two earlier. In some cases, refunds and identities can be stolen. If you suspect suspicious activity as the reason for your refund delay, contact the IRS immediately at 1-800-829-1040.

Often times, there are good reasons why your refund has been delayed. If you opted for a paper check from the IRS, expect to wait at least twice as long as if you did direct deposit. In order to minimize wait time in the future, plan on e-filing with a direct deposit option next year.

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What If I Forgot To Include Information On My Taxes?

May 30th, 2014 — 2:56pm

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Forgot Something On Your Tax Return? Don’t Worry!

So, you worked hours on your tax return, gathered your documents, filed on time and you are now awaiting your tax refund with eager anticipation. All is well until that moment of mild terror when you realize you forgot to include a vital document or deduction on your taxes. Don’t panic: all is not lost. There are ways to include missed information on your taxes, even if you’ve already filed them.

File an Amended Tax Return

When you’ve omitted information on your return, the IRS allows you to file an Amended U.S. Individual Income Tax Return called Form 1040X. However, you can’t e-file amended returns; they’ll have to be submitted it in paper form which increases the wait time by many weeks for any potential additional refunds.

Reasons to File

There are lots of reasons you might need to file an amended tax return, but there are some things that don’t necessitate one. You’ll need to file a 1040X form if you have experienced a change in your filing status, income, credits or deductions. But you do not have to file if you caught a math error after the fact. The IRS is pretty good about catching these types of mistakes and usually adjust these automatically for you. For example, If you forgot to attach the proper tax forms and a W2 is missing,  there’s no need to file this amended form. You should get a request from the IRS requesting any missing items. The IRS can easily find income that you may have omitted from your tax return, but sometimes it can take a very long time for the IRS to notify you.  That means if you made an error where you underpaid your taxes in some manner, you will accrue penalties and interest until your tax liability is paid in full.  It could pay for you to file an amended return to minimize penalties & interests.  On the other hand,  the IRS isn’t as well-equipped for finding missing credits or deductions that you may have overlooked, and which could increase your refund.  In this case, don’t wait until you get a letter from the IRS looking for more information. Instead, be proactive and file the amended return.  After all it’s your money and the IRS does NOT have to pay you interest for holding onto your well deserved refunds.


You have three years from the original filing date to submit Form 1040X, or two years from the date of tax payment.   You’ll need to submit a separate 1040X form for each tax return you’re amending and mail them separately to the IRS. Also, don’t assume they are all being mailed to the same mailing address.  There are usually separate processing PO Boxes for each tax year you are amending.  If you plan on claiming more of a refund, you must wait until you get your original refund in the mail or via direct deposit before filing the 1040X. Again, keep in mind that amended refunds take awhile to process, so it could take up to 12 weeks before you receive anything. If you owe more taxes as a result of the amended return, pay what you owe right away to avoid fees and penalties from piling up, as the IRS will begin charging you based on the due date of your original tax return.

Track Your Status

Similar to tracking your original refund status, the IRS has a Where’s My Amended Return? tool (you can also check R&G Brenner’s Where’s My Refund page as we include State Refund links as well) that you can use to track your amended return’s status. Alternatively, you can call the IRS at 866-464-2050. Have your taxpayer identification number or social security number handy, along with your date of birth and zip code.

If you forgot to include some vital information on your tax return, follow the steps above to make sure you pay all the right taxes and get your full refund.  Or, simply contact an experience R&G Brenner tax professional today, and we’d be happy to assist you.

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April 15 Countdown & Last Minute Tax Tips

April 14th, 2014 — 2:50pm
last minute tax tips 604cs032713 300x162 April 15 Countdown & Last Minute Tax Tips

Tick Tock, TickTock…April 15th Deadline

With the clock about to strike midnight on the 2013 Tax Year Filing season, the following is a quick list of tax tips for all you last minute filers out there:

April 15th Deadline

Yes, we all know the saying “Death & Taxes…”. And nothing drums up the cold sweats and association with taxes like the April 15th deadline. However, here is something that many taxpayers do not know: This deadline is only if you OWE taxes to the IRS.  If you are due a refund from the IRS, you actually have 3 full years from the April 15th deadline to claim and receive your refund before it becomes the property of the U.S. Government.  So, as long as you file your 2013 tax return by April 15th, 2017 you will get your refund.  There are of course, many reasons to file your 2013 tax return before the deadline.  It’s your money!  So don’t let the government hold on to it especially when they do not have to pay interest on it.  If you owe, and you do not have all of your tax documents ready, you can always file an extension.  Extensions must also be filed before the April 15th deadline.  REMEMBER: An extension is only an extension to file your final tax return, NOT to pay the taxes you owe.  Therefore, expect to send payment for the estimated amount of taxes you owe along with any extension.

Beware of IRS Scams

IRS & Tax related Scams have been steadily increasing over the last few years.  The most common scam going around is IRS impersonators contacting unsuspecting taxpayers and getting them to divulge their confidential personal information which can be used to open up credit cards in the victims name and/or to a file a fraudulent tax return in their name in order to steal refunds.  NOTE: The IRS will NEVER initiate contact with your via email, phone, fax or text.  They will always send you a written notification with instructions.  Even if you receive written communication, double check that the contact information on the letter matches the IRS contact information from the IRS website.  If you think that you are the target of a tax related scam, report it to phishing@irs.gov.

Sign Your Return & Mail To Correct Address

While this may sound trivial, many taxpayers forget to sign their tax returns!  Your tax return is technically not considered filed if it is not signed.  While the majority of tax returns are filed electronically, there are still many reasons why a return would be filed as paper.  Furthermore, if you had your return prepared by a professional, be sure that they signed the return as well.  While the taxpayer is ultimately responsible for what is listed on their return, a common scam that many “professionals” use to avoid any liability is to file a tax return as “self-prepared”.  In other words, the IRS thinks that the taxpayer prepared and filed the tax return themselves when in reality it was filed by a paid income tax preparer.  So be sure to check for all appropriate signatures!  Furthermore, be sure you are mailing your tax return to the right IRS processing center.  The IRS tends to change their mailing addresses annually and some  have separate mailing addresses for refunds and taxes due.  Here is a list of all the IRS tax processing centers.

Keep Your Tax Records

So you just sent in your taxes and now you can throw all of your W2s, 1099s, receipts & other tax related documentation into the fireplace, right?  WRONG! Depending on your situation, the IRS says to keep all of your tax records between 3 & 6 years.  So, just to be on the safe side, keep all of your tax records for at least 6 years.  Sometimes it could take years before the IRS notifies you with an issue and/or adjustment on your tax return.  If you plan on contesting changes in the IRS’ favor, you’ll need your backup documentation.  Recent budget cuts to the IRS will probably delay the notification process even more.

File With A Tax Professional

While millions of taxpayers are electing to forego using a tax professional in favor of filing themselves, the numbers don’t add up.  A couple of years ago R&G Brenner investigated The True Cost Of Preparing Your Own Tax Return and found that taxpayers who filed themselves were losing an average of $594 in refunds as opposed to using a Tax Professional.  Similarly, H&R Block is running ads this year that found 1 in 5 taxpayers who prepares their own taxes are not claiming all the deductions they are entitled to and are losing $490 in refunds.  Now there are many taxpayers who have very simple returns (standard deductions, no house, no kids, etc) and can easily file themselves.  However, the moment your tax return gets even a little bit complicated, you should seek professional help.  If you are going to Itemize Deductions (Schedule A), claim mortgage interest, have children (Earned Income Tax Credit), deduct business expenses (Schedule C), have rental income (Schedule E), or other complex tax positions, it is almost never a good idea to prepare your own tax return.

If you would like information about R&G Brenner, our services or if you need any tax assistance before or after the April 15th deadline, please feel free to contact us here, or call us toll free at (888) APRIL-15.

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NY Suspending Drivers Licenses For Those That Fail To Pay Taxes

March 24th, 2014 — 12:29pm


suspended drivers license 300x158 NY Suspending Drivers Licenses For Those That Fail To Pay Taxes

NY Suspending Licenses For Those That Owe $10k+

Governor Andrew M. Cuomo today announced that 8,900 New Yorkers had their driver licenses suspended for failing to pay taxes they owe the State. The crackdown is the result of legislation signed into law last year aimed at encouraging individuals who owe more than $10,000 in back taxes to settle their bills with the Tax Department.

“We are sending a clear message to tax delinquents that they either have to pay the taxes they owe, or face real consequences,” said Governor Cuomo. “For many, this message is getting through and as a result thousands of people have come forward to do the right thing and find a way to pay their taxes. Those who haven’t are losing their drivers licenses.”

“Driver licenses are a privilege, not a right, and this program has prompted unprecedented action from tax delinquents who were otherwise ignoring their debt,” said Commissioner Thomas H. Mattox. “Thousands have contacted us to do the right thing – pay their tax bills in full, or work with us to arrange a payment plan that satisfies the debt. Those who continued to ignore their debt have had their licenses suspended.”

In the first round of notifications, more than 17,700 drivers were contacted beginning in August, 2013. Along with the 8,900 suspensions, 6,500 tax debtors have either paid in full or are making payments on their debt, while 2,300 were determined to be ineligible for suspension.

As a result of the program, tax collections increased nearly $56.4 million on a state and local basis – a 34 percent increase over the initial estimate of $42 million. The program will continue to raise millions of dollars annually as thousands of other debtors are notified and, ultimately, resolve their debt.

When a driver gets a license suspension notice from the Tax Department, they have 60 days from the mailing date to arrange payment. If the taxpayer fails to do so, the Department of Motor Vehicles sends a second letter providing an additional 15 days to respond. If the delinquent taxpayer again fails to make contact, DMV is authorized to suspend the license until the debt is paid or a payment plan is arranged.

A taxpayer who drives with a suspension in effect is subject to arrest and penalties. Those with a suspended license can, however, apply for a restricted license that allows them to drive to work, and return directly home.

In New York State, 96 percent of taxes are paid by businesses and individuals who voluntarily meet their tax responsibilities. The remaining four percent is collected through the Tax Department’s audit, collections and criminal investigations programs. Through enforcement programs, such as suspension of driver licenses, the Department ensures fair tax administration for all New Yorkers.

Contact the NY Sate Tax Department

  • Visit www.tax.ny.gov 

  • Call (518) 862-6000 to settle a tax debt or arrange a payment plan

If you need additional assistance with this or filing your current or back taxes, contact an R&G Brenner tax professional today.

Source: NY State Department Of Finance & Taxation

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Tax Breaks for New Parents

March 13th, 2014 — 3:03pm
new baby 300x297 Tax Breaks for New Parents

Tax Breaks For New Parents

Having a child changes your life in countless ways, one of which is how you are taxed. New parents unlock several different tax breaks not otherwise offered which are designed to make raising a family financially easier. Here’s a look at a few of them.

Adoption Credit/Adoption Assistance

If you adopt a child, you might be able to use the costs associated with the adoption to reduce your tax burden. Adoption tax breaks come in two forms: a tax credit and a tax exclusion for adoption assistance provided by an employer. These apply if the adopted person is under 18 or unable to care for themselves. In 2013, the overall amount was worth up to $12,970 per child.

Here’s how it works: In one example provided by the IRS, you pay $12,970 in adoption expenses. You receive $2,970 from your employer to help, which lets you reduce your gross (taxable) income by that amount. The remainder ($10,000) becomes a tax credit—so you owe $10,000 less in taxes.

Higher Education Tuition Deduction

If you pay for a child’s higher education at an eligible institution, you can probably deduct many of the expenses and fees involved. The IRS defines an eligible institution as “any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U.S. Department of Education. It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions.” 

Regardless of whether you take the standard deduction or itemize your deductions, you can adjust your taxable income by up to $4,000 by paying for the education of a dependent. Tuition and fees are deductible, but some expenses (such as room and board) are not. 

Child Tax Credit

In perhaps the simplest of all child-driven tax breaks, the child tax credit might let you “reduce your federal income tax by up to $1,000 for each qualifying child under the age of 17,” per the IRS. There are several conditions to this credit, which are easy to meet for many, if not most, families.  For instance:

  • The child must be under the age of 17
  • The child must live with the taxpayer for the majority of the year
  • the child itself must provide less than half of their support

A phase-out of the credit starts at the following income levels: $110,000 for married taxpayers filing jointly, $55,000 for separately-filing married taxpayers, and $75,000 for everyone else.

Earned Income Tax Credit (EITC)

This one’s a bit more complicated than the child tax credit, but can be just as rewarding. The EITC applies to some individuals with no children, but its amount scales up the more children there are in a family. In an IRS-provided example from 2013, a joint-filing married couple making less than $48,378 (in both earned an adjusted gross income) with two qualifying children could receive a $5,372 maximum credit. With three or more children, the maximum income goes to $51,567 and the maximum credit leaps to $6,044. Several more combinations work as well, so some research may be necessary to see if your family qualifies. Note: to receive the EITC, a family must have earned no more than $3,300 in investment income.

Having a child can be a wonderful, if stressful, experience. However, new parents can rest a bit easier knowing that there are new tax options open to them. Contact an R&G Brenner tax professional to see if you qualify for these tax exemptions, credits and deductions and new parents can spend more time enjoying their family, and less time stressing about their finances. 

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Inheritance & Estate Tax 101

March 6th, 2014 — 2:53pm
estate tax 267x300 Inheritance & Estate Tax 101

Inheritance Vs. Estate Taxes

If you have recently inherited a large sum of money, you may have some questions about the inheritance tax, and whether or not it will affect you this tax season. Before you worry about having to pay an inheritance tax, read on to find out what exactly an inheritance tax is, whether your state requires you to pay an inheritance tax, and whether you qualify for an exemption.

The Inheritance Tax: What is it?

An inheritance tax refers to a tax where a person who has received money, assets, or property from a deceased person must pay a tax on those received items. Unlike an estate tax, the person who receives the money or property (i.e., the beneficiary) is the one who is responsible for paying the tax. Only eight states have implemented an inheritance tax, and the rules for how much you pay vary by state. These states are Indiana, Iowa, Kentucky, Maryland, Nebraska, New Jersey, Pennsylvania, and Tennessee. To better understand your state’s regulations, it is best to consult an accountant or professional tax preparer to help you with your state’s laws.

Exemptions and Reductions

Remember, the inheritance tax laws differ depending upon which of the eight states with the inheritance tax you live in. As such, exemptions regarding the tax also differ. In most cases, children who are beneficiaries will receive exemptions. Additionally, sometimes an exemption or reduction will be granted depending upon the relationship of the beneficiary with the deceased. Usually, family members or direct relatives have a higher chance of being granted an exemption than a friend or associate does.

Federal Estate Tax: The Death Tax? 

The federal government does not have any form of an inheritance tax. Rather, there is a federal estate tax. According to the IRS, the estate tax is “a tax on your right to transfer property at your death.” The federal estate tax differs from the inheritance tax in who is paying the tax—in an inheritance tax, the beneficiary is responsible for the tax; in the federal estate tax, the tax is taken from the property and/or assets of the deceased individual. This payout to the federal government for tax purposes occurs before the remaining assets are distributed to beneficiaries. An estate tax is only applied to assets/properties where the value of the assets is greater than one million dollars. Due to this, very few people are affected by the estate tax each year—only about 2 percent.  As of 2013, the filing of an estate tax is only required for estates that claim assets amounting to $5,340,000 dollars or more.

If you think you will be affected by the inheritance or the estate tax, contact an R&G Brenner professional for assistance.

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Making Sense of Tricky Tax Terms: AGI vs. Taxable Income, Dividends, Exemptions & Deductions

March 3rd, 2014 — 3:57pm
free tax help title 6241 300x124 Making Sense of Tricky Tax Terms: AGI vs. Taxable Income, Dividends, Exemptions & Deductions

tax (tăks) n. : One of the only things certain in life. See also Death.

Tax season can be intimidating to those who aren’t certified accountants or tax professionals. With all the tax terminology out there, simply understanding the terms on the form you’re filling out can be daunting. No fear—a tax-terminology-debunker is here:

Understanding: Adjustable Gross Income

First things first, you need to understand the total income. Total income refers to all income that was made in the fiscal year, either earned or unearned, before any exemptions or deductions. So, total income will refer to all the money you made in the year, including money from social security benefits, unemployment, alimony, wages/tips, pensions, etc.

Your adjustable gross income (AGI) refers to your total income minus adjustments that were made for moving expenses, IRA contributions, student loan interest, and alimony. Any adjustments can be found on your 1040, on lines 23-35. Don’t panic; If you need help filing your taxes, you can always consult an R&G Brenner tax professional.

Understanding: Taxable Income

Taxable income is pretty simple, and refers to the amount of money that you can be taxed for. This number is found by taking your AGI less your deductions and personal exemptions. This number will be used to find what tax bracket you fall into, and to then calculate your tax rate.

Understanding: Exemptions

A tax exemption can be taken by an individual, a business, or a charity, and refers to money or property that taxes do not have to be paid on, or may be reduced for. For example, charitable organizations do not have to pay property taxes. Another exemption sometimes granted is the case of those who inherit larges amount of money not having to pay an inheritance tax. In some cases, a tax exemption entirely precludes an individual from paying taxes, or significantly reduces the amount of money one has to pay.

Understanding: Deductions

A tax deduction, or a “tax write-off,” refers to an amount of money you get to subtract from your AGI due to various expenses that you paid or incurred throughout the year. For example, a deduction may be educational expenses, health insurance, mortgage interest, royalties, a home office, or auto expenses. Depending on whether you’re filing taxes as an individual or as a business, the types of deductions you quality for will differ as will the total percentage one is allowed to deduct.

Understanding: Dividends

A dividend is a percentage of profit that is paid out, in the form of income, to shareholders of stock and the like. A dividend tax is a tax that is levied on the amount of money that is allocated to each shareholder. If you are a shareholder and received money from those shares this year, you can expect to pay a dividend tax.

Understanding: Tax Due

Perhaps the most simple of tax terms (and the most detested), tax due means exactly what it says. The last line of your 1040, the tax due box, will tell you the total amount of money you owe to the IRS for any given tax year after all your deductions and exemptions have been calculated and applied.

Making sense of tax terms can initially feel frustrating—but it shouldn’t be. With a little bit of research, and a FREE consultation with an R&G Brenner tax professional, you can make this tax season your easiest yet!

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Understanding Obamacare’s Hardship Exemption

February 28th, 2014 — 10:27am


Affordable Care Act1 300x187 Understanding Obamacares Hardship Exemption

Do You Qualify for a Hardship Exemption?

9 million individuals have signed up for health insurance as mandated by the Patient Protection and Affordable Care Act of 2010 (PPACA). Also referred to as the ACA or Obamacare, the law requires all Americans to purchase or be covered under a plan of insurance for healthcare by  March 31, 2014. Failure to obtain coverage by this date results in a penalty that will be assessed on your 2014 tax return.

Problems with the operation of the website used for enrollments resulted in an expansion of the hardship exemption to individuals whose health insurance plans were cancelled. The exemption allows certain individuals to bypass the requirement for insurance coverage under extraordinary circumstances or hardship. It is important to understand both the individual mandate and hardship exemption and how it may affect your requirement to purchase health insurance under the ACA.

About the Individual Mandate

The individual mandate was created as a penalty to induce those individuals who otherwise qualified for health insurance to become enrolled in a plan of coverage. If a person is not otherwise exempt from the requirement to purchase health insurance they are subject to a non-compliance penalty beginning this year. The amount of the penalty is the greater of $95 or 1% of your taxable income in 2013. For example, if your taxable income in 2013 was $40,000, the penalty amount you would be assessed for not having health insurance would be $400.  However, this penalty can grow to over $2000 per family by 2016.

Basic Exemptions from Affordable Care Act Requirements

The individual mandate to purchase health insurance applies to nearly all Americans. Those not required to enroll in an individual plan of coverage before the deadline under the ACA include the following:

  • those who are currently insured;
  • individuals covered by either Medicare, Medicaid or state sponsored health insurance plan;
  • veteran health or TRICARE plan participants;
  • individuals who are permitted to claim a religious exemption;
  • persons who are undocumented and living in the United States;
  • individuals who are incarcerated;
  • Native American tribe members; and
  • those with individual income of $10,000 or household income of $20,000 in 2013 or where health insurance premiums represent 8% or more of their income.

Hardship Exemptions for the Individual Mandate

The hardship exemption, as explained in the ACA, is provided for those individuals who may not meet the requirements of the basic exemptions enumerated in the law. There are 14 different categories available for individuals looking to claim a hardship exemption from the individual mandate penalty imposed under the law.

These categories include: (1) homelessness; (2) notice of eviction or foreclosure within the six month period prior to January 1, 2014; (3) utility shut-off notice; (4) victim of domestic violence; (5) death of a close family member; (6) property damage due to a natural or human caused disaster; (7) a bankruptcy filing; (8) accrued medical expenses for at least 2 years; (9) an increase in expense related to the care of a family member who is ill, disabled or aging; (10) claiming a dependent child denied CHIP or Medicaid and subject of a court order for someone else to pay medical support for the child; (11) eligibility appeals decision for coverage; (12) reside in a state that did not expand Medicaid eligibility under ACA; (13) cancelled insurance coverage; and, (14) other hardship. 

Qualifying for a hardship requires the filing of an application and the provision of certain supporting documents as required for the numbered hardship exemption. Once approved, a hardship exemption certificate number will be issued that must be placed on your tax return in order to waive the individual mandate penalty.

For more information relating to the health care exchanges, please contact R&G Brenner’s insurance division at healthcare@rgbrenner.com.

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IRS Commish: Extensive Wait Times Calling IRS

February 12th, 2014 — 11:50am

New IRS commissioner John Koskinen warned taxpayers in the following video below that if you plan to speak to an IRS representative, expect to wait…a lot.  Koskinen said:

 “Given our very limited resources, our phone lines are going to be extremely busy this year – and there will frequently be extensive wait times…

While he tempers that statement by saying many tax resources can be found on the IRS.gov website, sometimes speaking with a person is ultimately necessary.  Given the recent report that found the IRS only answered 61% of the calls last year, don’t expect this number to climb anytime soon.  In fact, the IRS’ budget was cut by over $500 Million this year.  In other words, pray that you don’t have a problem (like identity theft) with your tax return that requires a phone call to the IRS.


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Will Inflation Affect Your 2014 Taxes?

February 10th, 2014 — 10:00am
f3748218ec804a56873addfe03398979 Will Inflation Affect Your 2014 Taxes?

How Inflation Affects Your Taxes

Everyone know the old adage ‘The only things certain in life are death and taxes”. As it turns out, inflation may have to be included in this saying. Inflation decreases the value of money as time goes on, ultimately making the dollar of today worth more than the dollar of the future. It influences how much we spend on everyday items, how much we make, and how much things like houses and cars cost. It even helps dictate what we owe the government come April 15th. In fact, in regards to tax season, inflation can actually help us save a few bucks.

The Rate of Inflation

In the past few years, the rate of inflation has been consistently inconsistent: it has fluctuated among the one, two, or three percentiles (with a few months that presented negative numbers). While inflation isn’t always all that noticeable on a month-to-month basis, its impact is truly felt over a period of several years. For example, according to the Bureau of Labor and Statistics, a $250,000 house purchased in 2008 would be worth approximately $270,000 in present day (if inflation is the only variable taken into consideration).

Inflation and Taxes

Each year, annual inflation leads to a number of tax changes. In 2014, per the Internal Revenue Service, more than 40 tax provisions are scheduled to be adjusted. Some of these adjustments include:

  • Tax Rate: The 2014 rate has changed to 39.6 percent for singles who have an income level higher than $406,750 and married couples (filing a joint return) who have an income level higher than $457,600. These numbers are up from $400,000 and $450,000, respectively.
  • Deductions: The 2014 standard deduction amount has increased to $6,200 for singles and $12,400 for married couples (filing a joint return). These numbers are up from $6,100 and $12,200, respectively. The 2014 standard deduction amount for heads of the household also increases, up to $9,100 from $8,950.
  • Personal Exemptions: The 2014 personal exemption amount rises to $3,950, up from $3,900. However, this phases out at $376,700 (for singles) and $427,550 (for married couples who are filing a joint return).
  • Earned Income Credit: The 2014 maximum Earned Income Credit rises to $6,143 for married taxpayers (who are filing jointly and have three or more qualifying children). This is an increase from the 2013 amount of $6,044.
  • Estate Exclusions: For people who pass away in 2014, the basic exclusion amount for their estates to descendants rises to $5,340,000. This is an increase from $5,250,000 for the estates of decedents for people who died in 2013.
  • Foreign Earned Income: The 2014 foreign earned income increases to $99,200. This is an increase from the 2013 amount of $97,600.
  • Alternative Minimum Tax Exemption: The 2014 Alternative Minimum Tax Exemption increases to $52,800 for singles and to $82,100 for married couples (filing jointly). This is an increase from the 2013 amounts of $51,900 and $80,800, respectively.

Provisions that Remain Unchanged

Despite the rate of inflation, some tax provisions remain unchanged. For example, the 2014 annual exclusion for gifts is $14,000 (the same as it was in 2013). Healthcare flexible spending arrangements (FSA) also stay at their 2013 level: the annual dollar limit on employer contributions to employer sponsored health FSAs remains at $2,500.

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