- September 15 – Third quarter installment of 2014 individual estimated income tax is due.
- September 15 – Filing deadline for 2013 tax returns for calendar-year corporations that received an automatic extension of the March 17 filing deadline.
- September 15 – Filing deadline for 2013 partnership tax returns that received an extension of the April 15 filing deadline.
- October 1 – Generally, the deadline for businesses to adopt a SIMPLE retirement plan for 2014.
- October 15 – Deadline for filing 2013 individual tax returns on extension.
The IRS has announced the inflation-adjusted contribution limits for health savings accounts (HSAs) for 2015. HSAs allow taxpayers with high-deductible health insurance plans to set aside pretax dollars that can be withdrawn tax-free to pay unreimbursed medical expenses. The 2015 contribution limit for individuals is $3,350; the limit for family coverage is $6,650. A catch-up contribution of an additional $1,000 is permitted for individuals who are 55 or older.
It turns out you can go back after all – at least when it comes to last year’s decision to convert your traditional IRA to a Roth. The question is, do you want to?
You might, if your circumstances have changed. For example, say the value of the assets in your new Roth account is currently less than when you made the conversion. Changing your mind could save tax dollars.
Recharacterizing your Roth conversion lets you go back in time, as if the conversion never happened. You’ll have to act soon, though, because the window for undoing a 2013 Roth conversion closes October 15, 2014.
Before that date, you have the opportunity to undo all or part of last year’s conversion. After October 15, you can change your mind once more and put the money back in a Roth. That might be a good choice when you’re recharacterizing because of a reduction in the value of the account. Just remember you’ll have to wait at least 30 days to convert again.
Give us a call for information on Roth recharacterization rules. We’ll help you figure out if going back is a good idea.
The deadline for the third quarterly payment of 2014 estimated taxes is September 15. That's a good date to do a quick review of the taxes you've paid so far for 2014, whether you pay in quarterly installments, through withholding, or both. If necessary, you can beef up your quarterly payment or adjust your income tax withholding for the remainder of the year. Be aware that withheld taxes are considered paid in equal amounts during the year, regardless of when the tax is withheld. An adjustment now to withholding or quarterly estimates can help prevent underpayment penalties for 2014.
Many mutual fund companies allow you to switch funds without a penalty or commission, as long as you stay within their family of funds. There's a catch though. Unless the funds are in a tax-deferred retirement account, you could owe income tax each time you make a switch. When you move money between funds, the IRS considers it a sale. You've sold shares in the first fund, then reinvested the proceeds in the second. As a result, you'll owe income tax on any gain.
You should consider switching funds when it makes economic sense to do so. Just don't forget that Uncle Sam may have his hand out at tax time.
If you do volunteer work for a charitable organization and have not kept track of your out-of-pocket expenses, you might be passing up an excellent opportunity to lower your tax bill. To qualify, your unreimbursed expenses must relate directly to the charity, and you must itemize your deductions on your tax return. Here is a brief rundown of some possible deductions.
Changes to the federal income tax code can prompt you to review the legal structure of your business. Last year’s increase in the top tax rate for individuals is one such change, since corporate rates remain the same. At the most basic level, businesses are taxed as either stand-alone or pass-through entities, and a significant difference between corporate and individual tax rates is reason for a new assessment.
If you’re debating between operating as a C corporation or an S corporation, here are three tax aspects to consider.
When you own stock in an S corporation, distributions can be considered a return of the money you invested in the business. The distinction means you may not owe income tax, assuming you have basis in the corporation.
Many tax and nontax reasons will affect your choice of the best type of structure for your business. Please call our office for a complete evaluation.
Sitting on a piece of investment property that you would like to sell? By structuring the transaction as a tax-deferred exchange, you can delay paying taxes on the full amount of the gain realized.
Also known as a "like-kind exchange" or a "1031 exchange," these transactions are only available for investment or business assets. Certain types of assets don't qualify for a tax-deferred exchange, including inventory, accounts receivable, stocks and bonds, and your personal residence. Keep in mind, too, that the like-kind exchange rules only defer the tax. Any gain will be recognized upon a taxable disposition of the replacement property.
Specific steps must be followed for a deferred exchange to be successful. Start by finding a qualified intermediary, such as an escrow agent or a title company, to facilitate this transaction. You then have 45 days from the date you relinquish your property to the qualified intermediary to name as many as three possible replacement properties. You must take title to the replacement property within 180 days. The rules state that you must replace real property with real property and personal property with personal property. Replacing an apartment building with commercial space, a strip mall, or even undeveloped land all qualify.
While deferred exchanges can save you a significant amount of taxes, following the specific rules can be tricky. For more information about these tax-advantaged transactions, please give us a call.
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