Guess what’s coming soon — April 15.
Have you started your taxes yet?
The biggest change for 2014 is health insurance. We’re all required to have it now, or pay a penalty equal to 1% of income, or $95 — whichever is most. We’ve told you about this before on MLF — hopefully, you’ve been taking advantage of the national healthcare plan, especially if your income is limited. If your income is too low, however, you won’t have to pay the penalty.
That same national healthcare plan had to be paid for — that’s why you’ll pay an extra 3.8% on investment income — if you make more than $200,000 income, that is. (More here on that fun development.)
Other interesting developments: energy efficiency improvements are still up for grabs. The energy efficiency credit was extended through 2015 — so 10% of the costs for insulation, windows (up to $200, that is), solar panels and such are still deductible. The total credit, for combined years since 2005, is $500. (Think of it as a bonus on top of your lower utility bills.)
Flexible medical spending account (FSA) leftovers can be carried over from last year — up to $500 worth, that is. (Since this didn’t go into effect until late October, your company may not know about it.)
If you’re in a same-sex marriage, you may be able to take some state tax deductions, depending on which state you live in. (Federal deductions are still in limbo.)
And if you were hoping for unlimited ‘loans’ from your IRA, forget it — you’ll only be able to do ‘indirect rollovers’ once a year now. (More on these developments here.)
Childcare expenses get you a tax credit. (Credits are even better than deductions, because they take dollars directly off taxable income.) That credit’s substantial, too — between 20-35% of your total costs. Even if you use a child care reimbursement account, allowing you to pay the bill with pretax dollars, it can only be used for up to $5,000. If you pay more than that, up to $6,000 caring for two kids or more, that extra $1,000 can be used to claim a part-credit.
Don’t forget to deduct for your home office — it’s a lot easier now to take a straight deduction, without a lot of extra figuring, for up to $1500, based on $5 per square foot in office space. (For more business tax-saving tips, go here.)
State sales tax deductions can still be deducted — but for 2014 only. At least Congress has not approved this for 2015, so far. The IRS even has a special calculator to figure how much you can deduct…assuming you live in a state that collects sales tax, that is. (Go here for more overlooked tax deductions.)
And of course, there’s the all-important Earned Income Tax Credit. The EITC applies if you earned less than $52,247 in 2014; use this tool to see if you qualify.
Other easy-to-miss tax credits include student loan interest, insurance premiums if you’re self-employed, adoption expenses and a child tax credit (the latter, if your children are under 17) . (More possibilities here, courtesy of the IRS.)
As always, these tips should get you started — but you’ll still need to consult the IRS, an accountant or other tax expert for help, if needed. The more you research, the better your results. Hopefully those mean a bigger refund, as well.