If you paid for medical or dental expenses in 2014, you may be able to get a tax deduction for costs not covered by insurance. The IRS wants you to know these facts about claiming the medical and dental expense deduction.
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I’ve commented on this before, and it seems that I need to comment again. If you owe taxes, are the subject of an audit or IRS investigation, or have general tax questions do not fall prey to a tax scam! It seems no one is immune from being targeted, and the perpetrators have not yet stopped looking for new victims. Students in Florida were the subject of a tax scam, the elderly are always favorites for dishonest schemers, and those of you living in Nevada are the most recent set of folks subject to a tax phone scam.
A federal appellate court has overturned a ruling by a Wisconsin Federal District Court judge banning the clergy housing tax exemption.
On 13 Nov 2014 the Seventh Circuit Court of Appeals overturned Judge Barbara Crabb’s November 2013 decision that the tax exempt treatment of the parsonage allowance was an unconstitutional regulation that violated the separation of church and state by providing ministers a tax benefit not available to all. The Freedom from Religion Foundation and its two co-presidents (collectively “the plaintiffs”) filed this suit to challenge the constitutionality of § 107 of the Internal Revenue Code, also known as the parsonage exemption. The exemption excludes the value of employer-provided housing benefits from the gross income of any “minister of the gospel.” 26 U.S.C. § 107. The plaintiffs conceded in the district court that they did not have standing to challenge § 107(1), which applies to in-kind housing provided to a minister, but argued that they did have standing to challenge § 107(2), which applies to rental allowances paid to ministers. The district court agreed that the plaintiffs had standing to challenge § 107(2), and held that the subsection is an unconstitutional establishment of religion under the First Amendment. In the ruling the court said.. "We conclude that the plaintiffs lack standing to challenge § 107(2). We therefore do not reach the issue of the constitutionality of the parsonage exemption. ... [P]laintiffs do not have standing to chal-lenge the constitutionality of the parsonage exemption. A person suffers no judicially cognizable injury merely because others receive a tax benefit that is conditioned on allegedly unconstitutional criteria, even if that person is otherwise “similarly situated” to those who do receive the benefit. On-ly a person that has been denied such a benefit can be deemed to have suffered a cognizable injury. The plaintiffs here have never been denied the parsonage exemption be-cause they have never requested it; therefore, they have suf-fered no injury." “This is a great victory for fair treatment of churches,” said Luke Goodrich, Deputy General Counsel of the Becket Fund of Religious Liberty, which filed a brief before the court in support of the housing allowance. “When a group of atheists tries to cajole the IRS into raising taxes on churches, it’s bound to raise some eyebrows. The court was right to send them packing.” The co-presidents of the Freedom from Religion Foundation, Dan Barker and Annie Laurie Gaylor, voiced disappointment with the decision and vowed to fight on. “We will continue to challenge this indefensible favoritism for religion in other forums until the issue cannot be circumvented," Mr. Barker said. "This privilege which religion and its leaders demand is discriminatory, and clearly signals governmental preference and subsidy for the promulgation of religion over nonreligion," said Ms. Gaylor. Under 26 U.S. C. § 107(2), passed by Congress in 1954, "ministers of the gospel" may exclude from their taxable income that portion of their stipend identified as a parsonage or housing allowance. When the Federal Income Tax Code was enacted in 1913 the value of church supplied housing was excluded from calculations of income for tax purposes. In 1954 Congress allowed cash housing allowances to be excluded from taxable income. The Becket Fund stated the purpose of a “parsonage allowance” was that it “ reduces tax discrimination among ministers from wealthy and poor denominations; and it keeps the government from making intrusive judgments about how ministers use their homes. Without the allowance, many minority or poor faith groups would have difficulty providing for their ministers.” “We will never ask for your personal information” or “we will never post without your permission” are commonly used phrases when companies warn consumers about scams and other ways to steer clear of predators looking to steal your identity, or worse, your money! These warnings are important and can help prevent you from falling prey to an unscrupulous individual, or fake company looking to make a fast buck. In the digital age, it is imperative that you safeguard your information and deal only with legitimate persons and entities.
This is true even in the world of taxes. The IRS reports it has received nearly 100,000 calls from concerned taxpayers, in response to calls received attempting to collect taxes. In response, the following IRS warning has been issued: ● Do not provide credit card or other financial information over the phone to a caller claiming to be an IRS agent. ● The IRS will never seek to collect a tax payment over the phone, so if you’ve been asked to do so, terminate the call. Asking the caller to verify certain information, such as your social security or tax ID number is a good way to identify a scam call. If you do this, be sure you don’t provide any of the information yourself, simply ask the caller to provide it to you. When a scam artist is unable to provide information within the knowledge of the IRS, it is a safe bet it isn’t the IRS on the other end of the line. For more information about how to avoid tax payment scams, call our office. If you have questions about taxes, call us for help. Contact Stanek Tax Services @ (407) 434-1040. And Remember, "Don't Panic, Call Stanek!" If you are a federal employee with outstanding tax debts, you may find that money from your TSP account (Thrift Savings Plan) is garnished to make good on those debts.
The Federal Retirement Thrift Investment Board (FRTIB) issued a final rule on September 10 in the Federal Register that makes TSP accounts (Thrift Savings Plan accounts)subject to federal tax levies. While this new rule might seem insignificant, the IRS has recently reported that collectively, federal workers owe $3.3 billion in back taxes. This new rule may help to collect some of that money. TSP accounts will be frozen after the TSP (Thrift Savings Plan) receives a qualifying tax levy or criminal restitution order. After the participant’s account is frozen, no withdrawal or loan disbursements will be allowed until the account is unfrozen. All other account activity will be permitted, including contributions, loan repayments, adjustments, contribution allocations and interfund transfers. Once a disbursement from the account is made in accordance with the restitution order or levy, the hold will be removed from the participant’s account. For federal tax purposes, this is an important distinction. Worker classification affects how you pay your federal income tax, social security and Medicare taxes, and how you file your tax return. Classification affects your eligibility for employer and social security and Medicare benefits and your tax responsibilities. If you aren’t sure of your work status, you should find out now. This brochure can help you.
The courts have considered many facts in deciding whether a worker is an independent contractor or an employee. These relevant facts fall into three main categories: behavioral control; financial control; and relationship of the parties. In each case, it is very important to consider all the facts – no single fact provides the answer. Carefully review the following definitions. BEHAVIORAL CONTROL These facts show whether there is a right to direct or control how the worker does the work. A worker is an employee when the business has the right to direct and control the worker. The business does not have to actually direct or control the way the work is done – as long as the employer has the right to direct and control the work. For example: Instructions – if you receive extensive instructions on how work is to be done, this suggests that you are an employee. Instructions can cover a wide range of topics, for example: - how, when, or where to do the work - what tools or equipment to use - what assistants to hire to help with the work - where to purchase supplies and services If you receive less extensive instructions about what should be done, but not how it should be done, you may be an independent contractor. For instance, instructions about time and place may be less important than directions on how the work is performed. Training – if the business provides you with training about required procedures and methods, this indicates that the business wants the work done in a certain way, and this suggests that you may be an employee. FINANCIAL CONTROL These facts show whether there is a right to direct or control the business part of the work. For example: Significant Investment – if you have a significant investment in your work, you may be an independent contractor. While there is no precise dollar test, the investment must have substance. However, a significant investment is not necessary to be an independent contractor. Expenses – if you are not reimbursed for some or all business expenses, then you may be an independent contractor, especially if your unreimbursed business expenses are high. Opportunity for Profit or Loss – if you can realize a profit or incur a loss, this suggests that you are in business for yourself and that you may be an independent contractor. RELATIONSHIP OF THE PARTIES These are facts that illustrate how the business and the worker perceive their relationship. For example: Employee Benefits – if you receive benefits, such as insurance, pension, or paid leave, this is an indication that you may be an employee. If you do not receive benefits, however, you could be either an employee or an independent contractor. Written Contracts – a written contract may show what both you and the business intend. This may be very significant if it is difficult, if not impossible, to determine status based on other facts. When You Are an Employee Your employer must withhold income tax and your portion of social security and Medicare taxes. Also, your employer is responsible for paying social security, Medicare, and unemployment (FUTA) taxes on your wages. Your employer must give you a Form W-2, Wage and Tax Statement, showing the amount of taxes withheld from your pay. You may deduct unreimbursed employee business expenses on Schedule A of your income tax return, but only if you itemize deductions and they total more than two percent of your adjusted gross income. When You Are an Independent Contractor The business may be required to give you Form 1099-MISC, Miscellaneous Income, to report what it has paid to you. You are responsible for paying your own income tax and self-employment tax (Self-Employment Contributions Act – SECA). The business does not withhold taxes from your pay. You may need to make estimated tax payments during the year to cover your tax liabilities. You may deduct business expenses on Schedule C of your income tax return. IRS TAX PUBLICATIONS If you are not sure whether you are an employee or an independent contractor, get Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. Publication 15-A, Employer’s Supplemental Tax Guide, provides additional information on independent contractor status. Stanek Tax Services · 15701 State Road 50 Ste 204 · Clermont, FL 34711 Tel: (407) 434-1040 · Fax: (877) 386-1040 · e-Mail: [email protected]
Tel: (407) 434-1040 · Fax: (877) 386-1040 · e-Mail: [email protected] Don't Panic, Call Stanek!
If you receive a letter from the IRS about your tax return, don’t panic! The IRS notice you receive likely covers a very specific issue about your account or tax return. Generally, the IRS will send a notice if you owe additional tax, are due a larger refund, if there is a question about your tax return or if the IRS needs additional information from you to process your return or resolve your issue. If you receive a letter or notice from the IRS, it will outline the reason for the correspondence and will provide instructions and next steps. Many of these letters and notices can be dealt with simply. 3) There are a number of reasons why the IRS might send you a notice. Notices may request payment of taxes, notify you of changes to your account, or request additional information. The notice you receive normally covers a very specific issue about your account or tax return. 4) Each letter and notice offers specific instructions on what you are asked to do to satisfy the inquiry. 5) If you receive a correction notice, you should review the correspondence and compare it with the information on your return. 6) If you agree with the correction to your account, then usually no reply is necessary unless a payment is due or the notice directs otherwise. 7) If you do not agree with the correction the IRS made, it is important that you respond as requested. You should send a written explanation of why you disagree and include any documents and information you want the IRS to consider, along with the bottom tear-off portion of the notice. Mail the information to the IRS address shown in the upper left-hand corner of the notice. Allow at least 30 days for a response. 8) Most correspondence can be handled without calling or visiting an IRS office. However, if you have questions, call the telephone number in the upper right-hand corner of the notice. Have a copy of your tax return and the correspondence available when you call to help us respond to your inquiry. 9) It’s important that you keep copies of any correspondence with your records.  If your lender cancelled or forgave any of your mortgage debt, you generally have to pay tax on that amount. But there are exceptions to this rule for some homeowners who had mortgage debt forgiven in 2013.
1. Cancelled debt normally results in taxable income. However, you may be able to exclude the cancelled debt from your income if the debt was a mortgage on your main home. 2. To qualify, you must have used the debt to buy, build or substantially improve your principal residence. The residence must also secure the mortgage. 3. The maximum qualified debt that you can exclude under this exception is $2 million. The limit is $1 million for a married person who files a separate tax return. 4. You may be able to exclude from income the amount of mortgage debt reduced through mortgage restructuring. You may also be able to exclude mortgage debt cancelled in a foreclosure. 5. You may also qualify for the exclusion on a refinanced mortgage. This applies only if you used proceeds from the refinancing to buy, build or substantially improve your main home. The exclusion is limited to the amount of the old mortgage principal just before the refinancing. 6. Proceeds of refinanced mortgage debt used for other purposes do not qualify for the exclusion. For example, debt used to pay off credit card debt does not qualify. 7. If you qualify, report the excluded debt on Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness. 8. Other types of cancelled debt do not qualify for this special exclusion. This includes debt cancelled on second homes, rental and business property, credit cards or car loans. In some cases, other tax relief provisions may apply, such as debts discharged in certain bankruptcy proceedings. 9. If your lender reduced or cancelled at least $600 of your mortgage debt, they normally send you a statement in January of the next year. Form 1099-C, Cancellation of Debt, shows the amount of cancelled debt and the fair market value of any foreclosed property. 10. Check your Form 1099-C for the cancelled debt amount shown in Box 2, and the value of your home shown in Box 7. Notify the lender immediately of any incorrect information so they can correct the form. Stanek Tax Services · 15701 State Road 50 Ste 204 · Clermont, FL 34711 Tel: (407) 434-1040 · Fax: (877) 386-1040 · e-Mail: [email protected] Capital loss carryover
If your capital losses exceed your capital gains, you have a capital loss carryover for the next tax year. You can use the carryover to offset capital gains plus up to $3,000 of ordinary income. Technically, capital losses carry forward as short-term and long-term losses. However, because of netting rules, whichever type of loss you have, it will be used to offset all of your current gains and then ordinary income up to $3,000. Limit on carryovers: Capital losses can be carried forward indefinitely; there is no fixed limit. However, capital losses end on death. They cannot be used by a surviving spouse beyond the joint return for the year of spouse’s death. Charitable contribution carryover If your charitable contributions are limited because of your adjusted gross income (AGI), excess amounts can be carried forward to future tax years (subject to AGI limits). Limit on carryovers: Charitable contributions can be carried forward for 5 years. There is a special 15-year carryover rule for contributions of conservation easements. Investment interest carryover If your investment interest deduction is limited due to a lack of investment income, the excess can be carried over to future tax years. The annual deduction for investment interest cannot exceed investment income for the year. Limit on carryovers: There is no fixed time limit. Home office deduction carryover If your home office deduction is limited because of your income from the home office activity, the excess deduction can be used on future tax returns to the extent there is sufficient income from the home office activity. You do not have to be in the same home office in the carryover year in order to use the carryover. Limit on carryovers: There is no fixed time limit. Net operating loss carryover If you have a net operating loss (NOL) carryover that was not used up, you can apply the NOL to future years. The NOL is reported as a negative figure on the "other income" line on Form 1040. Limit on carryovers: NOLs can be carried forward for up to 20 years. STANEK TAX SERVICES · 15701 STATE ROAD 50 STE 204 · CLERMONT, FL 34711 Tel: (407) 434-1040 · Fax: (877) 386-1040 · e-Mail: [email protected] |
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