The 2014 tax season is fast approaching, and it’s time to make plans. Each year the factors that impact tax planning change. The tax landscape for 2014 is no different. The Affordable Care Act, raising interest rates and more have impacted the tax strategy of many individuals and companies.
According to a story on CNBC, “As 2014 approaches, advisors are finding themselves talking about some of the same themes they do year in, year out—at least, on the tax front. This year…wise investors will be more aggressive about harvesting their losses to offset any gains.”
There are many individuals who have had a significant reduction in their income during the year. In many cases it is much more than expected. This will make a Roth IRA conversion an attractive move. Income tax will be required on the value of this conversion. Taxpayers with a low tax liability could pay less than in past years.
Affordable Care Act
There is currently a 3.8 percent net investment tax resulting from the Affordable Care Act. The IRS is anticipated to provide quite a bit of information regarding this issue. This year they are also including information that covers gay couples submitting federal returns as a married couple.
2014 IRS Returns
The IRS will inform the public when it will begin accepting returns for the 2014 tax season. They are currently testing, programming dozens of IRS systems needed to process over 149 million tax returns.
Tax law changes for 2014 impact high-income earners. Couples who have an income of $450,000 or individuals with an income over $400,000 will now have a tax liability including a 20 percent capital gain tax.
As with every tax year it’s best to create a plan before the season begins. Meeting with a tax expert to determine your best options is essential. They will know how to navigate the changing tax landscape.