2015 Contribution Limits for Retirement Accounts

The IRS has announced the 2015 contribution limits for both employer-sponsored plans and individual retirement accounts (IRAs). Increased limits may provide individuals and businesses with opportunities for additional tax savings in the coming year. Employer-sponsored Plans 401(k), 403(b), and most 457 plans. In 2015, employees may defer up to $18,000 in earnings (up from $17,500 in 2014). For those 50 and older, the limit on supplemental “catch-up” contributions has increased from $5,500 to $6,000. Defined contribution plans. The dollar limit on “annual additions” (generally, combined contributions of the employee and employer) to a participant’s account in a defined contribution plan, … Continue reading

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Congress Passes Extender Legislation for 2014

On December 19, President Obama signed legislation extending a number of tax breaks that had expired at the end of 2013. For many individuals and businesses, these deductions and credits can provide substantial tax savings for the 2014 tax year. Below are some of the more significant provisions in the extender package. Individuals State and Local Sales Tax Deduction. Individuals who itemize their deductions may choose to deduct state and local sales taxes instead of state and local income taxes. This provision may help taxpayers who purchased big-ticket items, such as automobiles, in 2014, as well as taxpayers in states … Continue reading

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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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