Gifting Limits Increased
The annual contribution amount excluded from gift tax has increased from $13,000 to $14,000 for each designated beneficiary and from $26,000 to $28,000 for each designated beneficiary for married couples who elect to split gifts on their gift tax returns.
The special 529 plan gift tax exclusion for contributions made in one year to a designated beneficiary increased from $65,000 to $70,000 for single filers and from $130,000 to $140,000 for married couples who elect to split gifts on their gift tax returns.
2014 Tax Season to Start Later Following Government Closure
The 2014 tax season is going to start a little later after the Government closure in 2013.
The 3.8% Net Investment Income Tax
Originating as a component of 2010 health care legislation and first effective in 2013, the 3.8% NIIT is assessed on the lesser of net investment income or modified adjusted gross income (MAGI) above specific thresholds. The MAGI thresholds are $200,000 for single individuals, $250,000 or joint filers and surviving spouses, and $125,000 for married taxpayers filing separate returns.
Inflation Adjustments Predicted to Fall
Although the IRS will not release official details until later in the year, projections for 2014’s inflation adjustments to tax-code provisions put the rate at around 1.6% – much lower than last year’s figure of 2.5%. If the figure proves to be accurate, many taxpayers will find themselves saving money – for instance, a married couple filing jointly on income of $100,000 will owe $145 less in 2014 than 2013.
IRS Suspends Tax Refunds and Tax Court Closes during Government Shutdown
The Internal Revenue Service has temporarily stopped sending out tax refunds, and the Tax Court has suspended operations during the federal government shutdown, as lawmakers in Congress continue their battle over delaying or defunding “Obamacare” for a year. However, the IRS has confirmed that Americans must continue to pay their taxes throughout the Government shutdown. Tax audits have also been suspended until the Government reopens.