Returning Value Blog

As in the past few years, most of the 2014 changes to the Form 990 and its many schedules are fairly minor. There is, however, one exception—Schedule A: the schedule required for all Section 501(c)(3) public charities, which has gone from four to eight pages and now includes eighteen pages of instructions.

Although the government has chipped away at some of the biggest tax shelters for individuals, at least one solid foundation is still standing: your home. During the period when you own a home, it can be a source of valuable tax deductions for mortgage interest and property taxes. Even better, if you sell the home at a huge profit, you may be able to pocket all or most of the gain from the sale—tax-free.

Despite recent proposals to scale back benefits, Section 529 plans remain a tax-favored way for parents to set aside funds for college. Here are the answers to several key questions on the subject:

Whether it is a beach house, a cabin in the woods or some other place, a vacation home can be a valuable source of tax breaks, as well as rest and relaxation. For example, you can deduct property taxes along with your mortgage interest (assuming the combined acquisition debt of your main home and vacation home does not exceed $1 million).

Hypothetical situation: You decide to rent out your vacation home this upcoming summer when your family is not using it. The rental income you will receive can offset some of the costs of ownership. Of course, this income is taxable, but you may claim offsetting deductions for a portion of your expenses.

What to Look For

If you’re the owner of a profitable operating business selling into foreign countries, and most of your production costs are in the U.S., you may have an opportunity to gain considerable tax savings.

The Opportunity

Since the passage of the Jobs Act of 2004, any U.S. company that directly exports goods it manufactures here may create an Interest Charge (IC) Domestic International Sales Corporation (DISC), or IC-DISC, to act as the “selling agent” for your operating business. What does this mean? An IC-DISC is an underutilized tax incentive that is “the bucket of money in the parking lot.”

On February 19, 2015, the IRS issued Notice 2015-17, which provides some interim relief for small employers from the excise taxes that could be imposed for non-compliance with the Affordable Care Act (ACA).

1. Employer reimbursement plans for small employers will be allowed through June 30, 2015 without imposition of the excise tax. Prior to the ruling, the IRS’ position was that programs that reimbursed employees for their individual purchases of health insurance constituted a ‘plan’ for purposes of the ACA,and would therefore be subject to its provisions, regardless of the size of the employer. The Notice provides that programs offered by employers who are not otherwise subject to the ACA (employers with less than 50 full time equivalent employees) can offer reimbursement programs during the first six months of 2015. These programs can include reimbursement for individual policies, group policies and policies that provide Medicare Part B and D coverage.

If you are expecting an income tax refund from the Alabama Department of Revenue, be aware that you may receive a letter in the mail asking you to go online to confirm your identity. This letter is legitimate and must be responded to in 30 days or, according to the letter, your refund will be denied.

Enhancement limit for 2014, reduction for 2015

For small-business owners who frequently buy new equipment and other assets for their business activities, the new tax law enacted at the end of 2014—the Tax Increase Prevention Act (TIPA)—provides a temporary reprieve. Signed on December 19, 2014, TIPA extended a Section 179 deduction retroactive to January 1, 2014. But this provision expired—again—on December 31, 2014. As things now stand, the maximum deduction will fall precipitously in 2015 unless Congress takes further action.

There is no time like the present

If you are established in a job or operate your own business, when should you start saving for retirement? Although there are numerous aspects to consider and complications in certain situations, the short answer is relatively simple: immediately!

If you have recently entered the workforce, the sooner you begin a program of retirement saving, the better. If you are already in the midst of your career, you should not delay any longer. And if you are nearing the traditional time for calling it quits, better late than never. 

In its continued effort to simplify financial reporting for private companies, the Financial Accounting Standards Board (FASB) has issued an update to its standards for accounting for business combinations.  The update, Accounting for Identifiable Intangible Assets in a Business Combination, offers private companies an alternative method of accounting for certain acquired intangible assets.