5200 W Market St
Greensboro, NC 27409
336-852-9505
Terry Hough
President
|
|
Income Tax Service
5200 W Market St Greensboro, NC 27409 336-852-9505 |
Terry Hough
President |
While many Obamacare tax provisions were rolled out in the past few years, there's a major ACA-related change coming into play for 2014. It's a penalty for people who don't purchase health insurance. As John Roth, a senior tax analyst with CCH group told the Chicago Tribune in 2012, soon after the law was upheld by the U.S. Supreme Court, "the government can't force you to buy insurance, but it can tax you for not buying it." Single persons who don't purchase health insurance will now have to pay a tax equal to one percent of their income, or $95 -- whichever amount is greater.
As of Jan. 1, individuals can no longer deduct their itemized state and local sales taxes. In 2013 a taxpayer had the option to deduct either their state income tax or the amount equal to their state's sales tax as an itemized deduction. Taxpayers in states with high income taxes -- such as New York, Connecticut and many of the New England states -- could deduct their income taxes. And people living in the seven states with no income tax -- Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming -- would deduct their sales tax. That sales tax deduction is going away.
Another victim of congressional neglect is the exclusion of expenses for taking mass transit from taxable income. Thanks to that tax break expiring, commuters using mass transit can only exclude $130 per month, compared to the previous $245. It used to be the transportation benefit was small because you had a small cost to your bus pass. And as bus passes increased (as transportation costs, like fuel, rose), this transportation fringe benefit kept increasing. (We rarely see any mass transit situations here in NC.)On the other hand, if your employer allowed you to exclude payments on your company parking, that benefit has gone up $5 this year, to $250. This is the biggest disparity between the two components of the commuter benefit that we have ever seen.
Before the passage of the Mortgage Relief Act of 2007, any debt discharged was treated as taxable income. The MRA act allowed taxpayers to exclude any such relief of mortgage debt through foreclosure, as well as any debt reduced by mortgage restructuring, for as much as $2 million. That provision expired Dec. 31, 2013. That means any cancellation of debt income is now taxable. This tax break was designed to help people with underwater mortgages, as it allowed them to not pay taxes on any debt they had been forgiven. But again, this measure has expired.
A deduction of up to $4,000 toward higher education expenses expired with the new year, as did a deduction of up to $250 for teachers who made out-of-pocket purchases towards school supplies. These provisions have been allowed to expire in the past, and were then retroactively reinstated. But for now, Congress can't come to an agreement on how to pay for these very popular measures.
Before 2014, older individuals who wanted to direct up to $100,000 of their IRA distributions to their favorite charities could do so tax free. As the Associated Press notes, this tax break worked well for people in upper-middle-class income brackets, rather "than taking a distribution from your IRA and then donating the amount to a charity and claiming an itemized deduction." One impact of this change is that some charitable giving by Americans could decline.
You can no longer get a $500 tax credit for making home improvements to save energy at your primary place of residence -- nor can contractors get a $2,000 credit per energy-efficient home they build for a customer.These were all provisions that were supposed to have gone away long ago. Congress just kept extending them year after year and when Congress didn't act on them (in 2013), they went away.