Two Big Changes to Know for 2014 Taxes

Matt Shelly
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The beginning of the year is a great time to start planning for next year's taxes. Tax changes in 2014 will affect the return you file in 2015. Understanding these tax changes can help you ensure that you're ready to assist your clients or employers when the new laws and guidelines take effect. Preparing for the future can help you guide your clients through making the right changes to minimize their tax burdens and comply with the upcoming changes. Two tax changes in particular are likely to affect many accounting professionals.

Clients who file taxes in higher income brackets may see a notable tax increase as a new surtax for Medicare goes into effect for individuals who report incomes of $200,000 or more on their 2014 taxes. The surtax also affects couples who file jointly with a combined income of $250,000 or more. The surtax is 0.9 percent of your income, and it may make a real difference in the total that you pay for the year. Savvy accountants should strive to help their clients understand this surtax and plan for deductions to offset some of this additional tax burden.

The second of the two tax changes involves the penalties associated with the Affordable Care Act. Those who have not enrolled in an eligible health plan under the ACA will be subject to penalties of either 1 percent of their taxable income for the year or $95 per adult and half that per child, whichever is greater. This shared responsibility payment has a maximum family value of $285 for 2014. This is particularly noteworthy, as the penalties will increase by large amounts in the years to come. Those without eligible medical coverage will pay a fee of $325 per adult in 2015 and $695 the year after.

Tax changes of these sorts are likely to remain unnoticed by many clients until later in the year, when it's more difficult to offset the higher rates and fees. Careful planning can help ensure that your employers and clients are ready for changes to tax laws and guidelines before any real fallout is felt from the adjustments.

These two tax changes may have a major impact on the amounts that some of your clients pay on their 2014 taxes. Preparation during the period leading up to the end of the year can start as early as January, and offsetting these tax changes with charitable donations and other deductions early may pay off greatly when next year's tax season rolls around. It falls on you as an accountant to help your clients meet their responsibilities as taxpayers and understand these and other tax changes in the years to come.

 

(Photo courtesy of freedigitalphotos.net)

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