As is becoming par for the course, significant changes to the tax code (for both personal and corporate taxes) were put into place on January 1st. An understanding of these laws and taking proper steps to address impending issues are essential in keeping you ahead of the curve and set to take on 2014. That is why we have compiled a few of the more impactful changes that may affect you this year.
As there are exceptions to every rule, be sure to meet with a tax professional before making any decisions to alter either your personal or your business tax plan to take into account the following changes:
The Affordable Care Act
Arguably the biggest change to taxes in 2014, the Individual Health Insurance Mandate went into effect on January 1st. This change requires that most U.S. citizens and legal residents purchase some amount of coverage or otherwise be subject to a penalty. Employers will have a brief respite and not be required to purchase insurance for their full-time employees until 2015. That being said, the metrics to determine the size of your company (whether you have 50 full-time equivalent employees) is based on your 2014 numbers.
Student Loans
Many people struggle to pay back their loans after graduation. In 2014, students who took out loans to fund their schooling will have payments that do not exceed 10 percent of their income. Some students, particularly those who are in the military as well as teachers and nurses, are eligible to have their student debt forgiven after a decade, while others could be eligible for the same forgiveness after 20 years.
Increased Tax Rates
Higher earning taxpayers will be feeling the pinch in 2014 as increased tax rates for them are on the rise by an additional 0.9 percent. As the tax brackets shift to adjust for inflation, the thresholds for itemized deductions and exemptions are phased-out. This is precisely why this time of year is especially important to focus on tax bracket management, asset location and titling as the New Year brings about changes that can negatively affect your tax rate.
At Rosillo & Associates, we want your year to go as smoothly as possible. Feel free to contact us for additional information about the impending tax laws and how we can ensure you don’t pay more than is owed.