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Horizon Accountants  

Horizon Accountants
113 South Timber Way
Broadway, VA 22815

540-896-3330

Certified Public Accountant

Horizon Accountants’ Tax Update

January 7, 2014

RE: 2014 filing season

Dear clients,

A new Medicare tax is scheduled to apply to those families with adjusted gross incomes greater than $250,000 beginning in 2013. An additional tax of .09 % of earned income over this threshold and 3.8 % of passive income over this threshold is added (based on a separate calculation). Another part of the Obama Care Bill is the threshold for medical expenses is now 10% of adjusted gross income. This too begins in 2013.

There is now a safe harbor election for businesses to deduct fixed asset purchases $500 or less. Businesses can also elect to sell one component of mass asset installation or previous capitalization. There is also a home office safe harbor election of $1500 with just the square footage documented and no record keeping required of expenses. These are all simplification procedures to the tax code.

Beginning with 2015, taxpayers will have to declare if they have health insurance on their returns due 4/15/16. Next year we will be required to sign off on this so get your documentation in order as we will require proof before signing the return. Those part of a mutual aid sharing plan are exempt. The plan must have an audit as many previously did not. We can provide audit assistance if needed.

The standard mileage rates for 2013 on business mileage are 56.5¢. The rate for medical and moving mileage is 24¢. Congress sets the charitable mileage and it remains at 14¢ a mile. Parking and tolls are in addition to mileage.

The standard mileage rates for 2014 on business mileage are 56¢. The rate for medical and moving mileage is 23.5¢. Congress sets the charitable mileage and it remains at 14¢ a mile. Parking and tolls are in addition to mileage.

Congress is planning to address tax reform in 2014 however mid-term elections may thwart any substantial changes. There is rumbling about tweaking corporate tax rates and reporting. As for individuals no major overhaul is expected. As of now the biggest issue is the Section 179 expensing election of fixed asset purchases for farmers and businesses is scheduled to go back to $25,000.

We look forward to visiting with you and preparing the best possible return for you in 2014! Please call if you have questions or want further clarification.

Sincerely,

Lawrence R. Yoder, CPA
HORIZON ACCOUNTANTS

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