Category Archives: Tax Topics

Inflation Adjusted Limits and Thresholds

One of our authors, Paul Winn, recently sent me tax information.
The IRS recently sent notification of modified revisions of inflation-adjusted limits and thresholds to reflect the change in calculating inflation from the previous method to the Chained Consumer Price Index prescribed under the Tax Cuts and Jobs Act.  Here are some the changed items :

Limit

Original Inflation Adjustment

Revised Inflation Adjustment

HSA contribution limits for individuals with family HDHP coverage (other HSA limits are unaffected)$6,900$6,850
Archer MSA

Self-only coverage out-of-pocket limit

Family coverage annual deductible

(other MSA limits are unaffected)

 

$4,600

$4,600

 

$4,550

$4,550

Adoption Assistance Exclusion and Adoption Credit

Phase-out begins at MAGI of

Completely phased out at MAGI of

$13,840

$207,580

$247,580

$13,810

$207,140

$247,180

Small Business Health Care Tax Credit

Phase-out begins at average annual wages

Phased out complete at average annual wages

 

$26,700

$53,400

 

$26,600

$53,400

Estate exclusion (for federal estate taxes)$11,200,000$11,180

To check out our tax courses, click here.

Federal Estate Tax Portability Act

Federal Estate Tax Portability
Federal estate tax portability means that a surviving spouse can inherit the estate and gift tax exemption of a surviving spouse.  Simply put, a couple can pass up to $10.86 million ($5.43 million for each spouse) in 2015 without the need for a trust.
To elect portability, a federal estate tax return, Form 706, must be timely filed at the death of the first spouse.
Example:Assume that Barney and Betty have joint assets of $10 million.  Barney dies first and all the assets pass to Betty under the unlimited marital deduction.  Barney uses none of his $5.43 million exemption.
Without Portability:  Barney’s exemption goes unused and is wasted.  Upon Wilma’s death, the amount of the $10 million estate that exceeds her $5.43 exemption will be subject to federal estate tax of approximately $1.6 million ($10.00M less exemption of $5.43M=$4.57M x 35% federal estate tax rate).
With Portability:  A form 706 is properly filed to transfer Barney’s exemption to Wilma.  Upon Wilma’s death, the $10 million estate is less than her $10.86 million exemption and the estate is passed to her heirs free of any federal estate taxes, saving $1.6 million.

Repair Regulation Relief – Relief or Stomach Ache?

The IRS has revamped the tangible property regulations for the 2014 tax year.  The new procedure allows small businesses to change a method of accounting under the final tangible property regulations on a prospective basis for the first taxable year beginning on or after Jan. 1, 2014.

“Taxpayers must evaluate certain expenditures to determine whether the costs are immediately deductible repair cots or capital improvements that need to be depreciated. In addition, regulations issued at Section 1.162-3 provide new guidance on when a taxpayer can deduct costs incurred to acquire “materials and supplies.”

The IRS is waiving the requirement to complete and file a Form 3115 for small business taxpayers that choose to use this simplified procedure for 2014.

The new simplified procedure is generally available to small businesses, including sole proprietors, with assets totaling less than $10 million or average annual gross receipts totaling $10 million or less. Details are in Revenue Procedure 2015-20, posted February 13, 2015 on IRS.gov.

For a great discussion on the pros and cons and details check out this Forbes article.  Repair Regulation Relief – What Does It Really Mean? (Not as Much as you think).

IRS. gov and Forbes.com

  • Thank you Patricia. I really love your courses. I learned so much about excel this weekend!”

    - Connie K.

  • Great course! Price was right and the material was very thorough.

    - Alex

  • “The course on ethics was one of the best correspondence courses I ever used.  It was well organized and the examples used were extremely helpful.”

    - Tommy R.