It’s always difficult to be caught up in a mad rush at the end of the tax season to get your federal taxes filed on-time. Filing at the last minute is bound to be particularly stressful this year due to the scaled back phone support from the IRS and the additional requirements set by the Affordable Care Act. Here are some tax changes to take note of now so you are not surprised down the stretch.
Sales tax can be deducted once again thanks to the last minute efforts in Congress. The primary beneficiaries of this measure are resident of states that have no income tax, as well as those living in states will considerably low income taxes. There is an IRS Sales Tax Deduction Calculator online to help assess the amount covered.
Mortgage insurance premiums may also be deducted in some cases. Only people with a 2014 gross income that is less than $109,000 and who took out the loan after 2006 are eligible for the tax break. Programs like TurboTax Online will make the calculation for you automatically when you enter your income and your mortgage insurance paid.
Seniors are also going to get a couple additional breaks this year thanks to Congress. Those who are 70 and a half years of age may transfer as much as $100,000 from their individual retirement account (IRA) to a qualified charity. This will not be included in the gross income but instead count as the required minimum distribution. This may reduce taxes on Social Security benefits and avoid the Medicare high income surcharge.
Note that these tax breaks are only for the 2014 tax return. Congress has not made them permanent and the changing political landscape is likely to affect their renewal for the following year. Make sure to check several online tax resources next tax season to make sure they were renewed again.
Investment Income Tax
Single taxpayers with adjusted gross incomes in excess of $200,000 and married taxpayers with $250,000 or more may have to pay 3.8% surtax on their investments. Tax-exempt interest is not covered by the surtax.