If you use your car when making a work-related move in 2014, you can deduct your costs at the rate of 23.5¢ per mile (down from 24¢ per mile in 2013). The deduction is claimed as an adjustment to gross income (“above-the-line”), so you don’t have to itemize to claim it. However, to be eligible for the deduction, the distance between the new work location and your former home must be at least 50 miles more than the distance between your old work location and your former home. Also, you must work at the new location for at least 39 weeks for an employer or 78 weeks if self-employed (there are some exceptions)
Medical Driving
The deduction for driving to a doctor, pharmacy, hospital, or other medical treatment location in 2014 is 23.5¢ per mile (down from 24¢ per mile in 2013). You must itemize to benefit from this deduction. For 2014, you claim out-of-pocket medical costs only to the extent they exceed 10% of your adjusted gross income (7.6% of adjusted gross income if you or your spouse is 65 or older by the end of the year).
Business Driving
The deduction for 2014 is 56¢ per mile (down from 56.5¢ per mile in 2013). If you are a sole proprietor, the deduction is taken on Schedule C. If you are an employee, you figure your unreimbursed employee business expenses on Form 2106; the result is then claimed as a miscellaneous itemized deduction. You must itemize to claim the write-off, and your total miscellaneous itemized deductions must exceed 2% of your adjusted gross income to produce any deduction. If your employer reimburses you for your car usage under an “accountable plan,” you don’t take any deduction; the reimbursement isn’t taxable to you, and the employer (not you) deducts the reimbursement.
Tips on Standard Mileage Rates for Deductions Purposes
Standard mileage rates can be used to figure the cost of the driving rather than keeping track of your actual car expenses. However, you still need to keep a record of your mileage, including notations on the date, odometer reading, destination, and purpose of each trip.
Deadlines Relating To Form 1099-MISC
· By January 31, 2014, provide a copy of the 1099-MISC to the vendor or contractor, and
· By February 28, 2014, mail the 1099-MISC forms to the IRS, or
· By March 31, 2014, electronically file the 1099-MISC forms with the IRS.
Details On Who Receives Form 1099-MISC
Form 1099-MISC must be provided to any "non employee" to whom you paid $600 or more during 2011. This includes:
· Payments for rental property expenses
· Payments to a physician, physicians' corporation, or other supplier of health and medical services. Issued mainly by medical assistance programs or health and accident insurance plans
· Payments for services performed for a trade or business by people not treated as its employees. Examples: fees to subcontractors or directors and golden parachute payments
· Fish purchases paid in cash for resale
· Crop insurance proceeds
· Gross proceeds paid to attorneys.(Box 14) (Due to IRS February 15th).
In addition, payments to certain kinds of corporations must be reported, including medical and health care payments (box 6) and attorney fees (box 7).
When To Issue Form 1099-MISC
Form 1099-MISC is used to report a variety of different types of payments, including payments for services performed by non-employees, for legal services, for medical care payments, and for rent. In general Form 1099-MISC is required if:
· the person making the payment is engaged in a trade or business,
· if the person receiving the payment is not a corporation, and
· the total of all payments throughout the year to the recipient was at least $600.
2/25/14: News Regarding F 1099-MISC For Small Business
Self-employed persons and businesses of any size are required to report payments for services rendered by independent contractors by using Form 1099-MISC.
Final Notes on Married Filing Separately Status
When you are filing separately, you must still cooperate and share tax information. If you both have children, you must coordinate who gets to claim the children as dependents. Finally, spouses filing separately must both take the standard deduction or must both itemize their deductions. People who choose to file as Married Filing Separately do not qualify for several tax benefits and tax credits. While filing jointly can in some cases result in lower federal tax, filing separately creates separate tax liabilities for each spouse, which can be useful in minimizing tax risks.
Reasons for Married Couples to File Separately
There are very good reasons for a husband and wife to file their tax returns separately. Some good reasons for filing separately include:
· One spouse wants to file taxes, but the other doesn't want to file.
· One spouse suspects that the joint return might not be accurate.
· One spouse doesn't want to be held responsible for the payment of tax shown on the joint return.
· One spouse owes taxes, and the other would get a refund.
· Spouses are separated, but not yet divorced, and they wish to keep their finances as separate as possible.
Married Filing Separately Status
If you are married, you and your spouse may file separate tax returns. Married filing separately (MFS) taxpayers have the least beneficial tax treatment. But MFS status is the one way to achieve separate tax liabilities, which is a benefit not to be overlooked. Married taxpayers should carefully consider whether filing joint or separate returns will be most beneficial for their unique financial situation.
Married Filing Jointly Status
If you are married, you may choose to file one tax return jointly with your spouse. A joint tax return combines the incomes and deductions of each spouse. In order to file jointly, both you and your spouse must agree to file a joint tax return, and both must sign the return. Married Filing Jointly (MFJ) provides more tax benefits than filing separately.
Head of Household
If you are single and have been taking care of a dependent for more than six months, you may be eligible for the Head of Household filing status (HOH). This filing status benefits from a higher standard deduction and lower tax rates than those who are just "single" filers. The criteria is strict, as only certain types of closely-related dependents will qualify a taxpayer for HOH status. Additionally, under certain circumstances, a married person with a dependent might qualify for HOH if he or she has been living apart from his or her spouse for the last six months of the year or more.
What is a filing status?
A person's filing status determines which tax rates and which standard deduction amounts apply to a specific tax return. This determination is mostly affected by what that person's marital status is on the last day of the year. If you are married on the last day of the year, you are considered married for tax purposes for that year. If you are not married on the last day of the year, you are considered not married for tax purposes for that year. There are special situations where married persons can be "considered unmarried" for purposes of qualifying for the head of household status even if they are not legally divorced or separated.
Conclusions on Obamacare
Emergencies and illness very rarely come at a good time. Some health problems can wait for a few weeks or months to be dealt with, others demand immediate attention. You may be able to delay dealing with nagging discomfort from back pain, but you shouldn’t delay seeking treatment for a suspected heart condition. Even if you’re one of the young invincibles, healthy people under the age of 30, accidents happen. What if you sliced your hand wide open while cooking? Stitches in an emergency room can be very expensive. What if you tripped during your morning run? A broken ankle can’t usually wait for treatment and might even require surgery. Get your health insurance during open enrollment so it will be there when you need it. If cost is an issue, you may be eligible to get help paying for health insurance. If you’re not eligible for government health insurance subsidies, consider buying a less expensive plan. Although it will pay less toward the cost of your health care, the premiums will be lower and at least you’ll have some coverage.
Obamacare: How to claim the credit?
Start by applying for insurance through your state’s health insurance marketplaces. You must enroll before March 31, 2014, to receive health insurance through the exchange. When you apply through an exchange, you’ll answer questions to determine whether you qualify for the credit.
Obamacare: Who qualifies for the tax credit (subsidy)?
You may be able to get this tax credit if your employer doesn’t offer health insurance, or if they do, it covers less than 60% of covered benefits, or the premiums would cost you more than 9.5% of your annual household income.
To qualify, you must purchase insurance coverage through your state’s“marketplace” also known as an exchange. Your income must not be too low or too high. You cannot get the credit if you qualify for government programs like Medicare and Medicaid. You are only eligible for the credit if your household income is between 100% and 400% of the federal poverty level.
Tomorrow: How to claim the credit?
Get Ready for Obamacare
Affordable Care Act, also known as Obamacare
Starting January 1, 2014, you are generally required to have adequate health insurance or pay a penalty. The good news is that if your income is within certain limits, you may qualify for an advanced premium tax credit to help pay for that coverage. This credit is paid directly to your insurance company as a subsidy.
Stay tuned, all this week and next, we will tell you all you need to know about Obamacare.
Key Filing Due Dates for 2014
Avoid penalties and interest for missing filing deadlines:
· January 31, IRS will begin processing personal tax returns.
· April 15, the normal deadline for filing personal returns. (It falls on a Tuesday.)
· October 15, the extended deadline for filing personal returns. (It falls on a Wednesday.)
Important: Remember, even if you file for an extension to file your tax return, you must estimate your tax liability and pay by April 15th.
