New Limits on Business Property Expensing in 2014

For 2014, two highly favorable federal income-tax provisions for business owners have been curtailed or eliminated. First, special 50% first-year “bonus” depreciation available before 2014 for certain qualified property is no longer available for most types of property. Second, the elective Section 179 expense deduction has been reduced from $500,000 to $25,000 a year starting this year. With these new limitations, small business owners will need to plan carefully to take advantage of the remaining Section 179 deduction. Operation of Section 179 For qualifying property purchased and placed in service during the year, the Section 179 deduction allows a business owner … Continue reading

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IRS Reduces Standard Mileage Rates for 2014

The IRS has announced a one half cent decrease in the standard mileage rates that taxpayers will use for calculating business, medical, and moving expenses in 2014. Use of the standard mileage rate is a popular alternative to using the actual expense method, which requires taxpayers to keep track of specific costs for maintenance, repairs, tires, oil, insurance, etc. Business Expense According to the IRS, the standard mileage rate for use in calculating 2014 business travel expenses is 56¢, down from 56.5¢ in 2013. The new rate also applies where the employer maintains an “accountable” plan for reimbursing employees who … Continue reading

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Notification Letter – De Minimis Safe Harbor Election Under the New Capitalization Regulations

New Capitalization Regulations ACTION ITEM: Business taxpayers must have written accounting policies in place on the first day of the tax year (January 1, 2014 for calendar year taxpayers) to deduct the de minimis amounts provided under safe harbor provision. Recently, the Internal Revenue Service issued final tangible property capitalization regulations. These regulations provide clarity to a complex area of tax law for business taxpayers who acquire tangible property or who own tangible property which they improve, maintain or repair. The final regulations address the proper characterization and tax treatment of expenditures related to these acquisitions, improvement, maintenance, and repair … Continue reading

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2014 Social Security Wage Base Increases to $117,000

The Social Security Administration (SSA) announced that the taxable wage base is increasing from $113,700 to $117,000 in 2014. The new limit raises the level of income subject to the 6.2% Social Security tax. According to the SSA, about 10 million of the estimated 165 million workers who pay Social Security taxes will be affected by the change.  Background Under the Federal Insurance Contributions Act (FICA), employers, employees, and self-employed workers pay two taxes on wage and self-employment income. One is the 6.2% tax for Old Age, Survivors and Disability Insurance (OASDI, otherwise known as the “Social Security tax”), and … Continue reading

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The IRS Is Warning the Public About a Phone Scam that Targets People Across the Nation

Callers claiming to be from the IRS tell intended victims they owe taxes and must pay using a pre-paid debit card or wire transfer.  The scammers threaten those who refuse to pay with arrest, deportation or loss of a business or driver’s license. The callers who commit this fraud often: Use common names and fake IRS badge numbers. Know the last four digits of the victim’s Social Security number. Make caller ID appear as if the IRS is calling. Send bogus IRS emails to support their scam. Call a second time claiming to be the police or DMV, and caller … Continue reading

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