Category Archives: Tax Changes

Holiday Gifts with Tax Benefits

Holiday Gifts with Tax Benefits Come in Many Forms, Shapes and Sizes

Some holiday gifts you provide to members of your family, employees and others may also yield tax benefits. Here are some examples:  Continue reading

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Learn About This Year End Tax Strategy

Save Money with This Year End Tax Strategy 

Do you want to save money with a unique year-end tax strategy? Year-end is rapidly approaching and you only have a couple of months to utilize tax-saving strategies. The Tax Cuts and Jobs Act of 2017 substantially increased the standard deduction and made changes that affect itemized deductions. Continue reading

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Senate Passes the Tax Bill, What’s Next?

Why is it so important that Senate Passes the Tax Bill?

Tax Cuts and Jobs Act Heads To Reconciliation

So, Senate passes the tax bill. Yes, the Senate GOP finally brought their version of the Tax Cuts and Jobs Act out of committee and before the full Senate. Tax Reform, another name for the bill, passed by a narrow margin of 51-49 down party lines. The only dissenting Republican Senator was Bob Corker of Tennessee, who tweets that he reluctantly cast his vote as “no” over long-term fiscal issues. Continue reading

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IRS Takes Action on Tax Credits

Why does the IRS need to take action on tax credits?

The IRS takes action on tax credits for the 2016 tax returns during the 2017 tax season for a good reason. Tax credits and tax fraud costs the government billions of tax dollars a year. The IRS is clamping down on tax credits due to these costs. In an effort to rein in tax fraud, some new laws took effect in 2016. These laws clamp down on individuals who file a fraudulent claim on the American Opportunity Tax Credit (AOTC), the Child Tax Credit (CTC), or the Earned Income Tax Credit (EITC).

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Trump’s Tax Plan

What does the future hold for a person’s taxes under President Trump?

One topic that is frequently being discussed is what are President Trump’s tax plan? How will it affect me as an individual? Numerous blog posts on the issue; many say that the wealthy will benefit the most from Trump’s tax plan, and some say that low-income taxpayers will see tax increases. So what is it? Continue reading

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Standard Mileage Reimbursement Rates Have Changed!

Every year, the Internal Revenue Service announces the optional standard mileage reimbursement rates. The IRS uses these rates to calculate the deductible costs of operating a vehicle for business, charitable, medical or moving purposes. Inflation is the primary reason why mileage reimbursement rates are have been adjusted for 2017.  Continue reading

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Seniors With Medical Deductions Beware, Affordable Care Act Will Trump Them!

Seniors With Medical Deductions

One example of itemizing deductions includes the cost of medical and dental expenses. For seniors with medical deductions, these include health insurance premiums. In the past, the medical expense deduction had a limit to the amount that exceeds 7.5% of a taxpayer’s adjusted gross income (AGI). I know this is not the most exciting subject; yet, is important that you pay attention to this change. Continue reading

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Spooked Over October Tax Due Dates?

Pumpkin season with ghouls and goblins are upon us and so are the October tax due dates. Don’t get spooked by it all, at least the tax due dates anyway. Read below for what a person’s or business’ tax responsibility may be for the month of October 2016. Halloween is not the most frightening part of October. If you are not ready for your tax deadlines, you could have a very scary experience when it comes time to file your tax returns in April.

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Are Olympic Champs Taxed?

Have you been following the Olympic Games? It is amazing the skill these athletes have. And, kudos to Michael Phelps for breaking a 2000 year old plus record! If you haven’t heard, the record that Michael Phelps broke is 2,168 years old to be exact. Think of him as breaking records from all the way back to 152BC. Continue reading

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2015 Tax Changes for Massachusetts

Here are four 2015 tax changes. Have your filed your income tax return yet in Massachusetts?

2016_04_13 2015 Tax Changes graphicIf not, you may want to get your tax information together today before your run the risk of being late. If you can’t get your information together, at the very least, consider filing an extension. The Massachusetts tax filing extension allows for an automatic six months. Note this is also the case for the IRS. Before you do that, take a few minutes to read about these income tax changes that took place on or before January 1, 2015 for the State of Massachusetts:

Filing Due Date for 2015 Income Tax Returns

If you are not aware, you should be that the filing of tax returns that include Forms 1, 1NR/PY and extensions are due on or before April 19, 2016. Please make a note of it. That is one week away!

Tax Rates

Personal income tax rates are applied against different classes of Massachusetts taxable income. The tax rate on most classes of income is scheduled to decrease in years where the state achieves revenue growth benchmarks set forth by the formula in M.G.L. Chapter 62, Section 4(b).

As of January 1, 2015, the 5.2% tax rate on most taxable income has been reduced to 5.15%. If you sell or exchange capital assets, let it be known that the short-term gains remains at 12%. Also, long-term gains from the sale or exchange of collectibles (after a 50% deduction) conitnues to be at 12%.

Gambling Loss Deduction

Did you take a gamble this year and lose? For the Massachusetts taxpayer, you should note that the new gambling loss deduction is the only deduction for gambling losses permitted. Massachusetts does not take up with the federal deduction under IRC § 165(d) for gambling losses.

A deduction  from Part B income for gambling losses experienced at certain Massachusetts licensed (under General Laws chapter 23K) gaming establishments, this includes racing meeting licensee or simulcasting licensee establishments. However, this is only limited to winnings from such Massachusetts establishments. This includes gross income for the calendar year and the deduction is claimed on Schedule Y.

Health Insurance, Penalty for Failure to Purchase – Tax Year 2015

Individuals who can afford health insurance in accordance with the law but do not act on it are subject to penalties for each month of non-compliance in the tax year. The exception is the provision for no penalty in the case of a gap in coverage of 63 consecutive days or less. The penalty will not be more than 50% of the minimum monthly insurance premium the individual would have been eligible for had they participated in the Connector, and will be enforced through the individual’s personal income tax return upon filing.

The Massachusetts Health Care Reform Act insists that an adult 18 and over who has access to affordable health insurance to purchase it. In 2015, individuals had to be enrolled in health insurance policies that meet minimum approved coverage standards according to the guidelines approved by the Commonwealth Health Insurance Connector Authority (the Health Connector).

These penalties apply only to adults who are considered able to afford health insurance according to Massachusetts guidelines. Annually, the Health Connector sets up individual criteria that decides if individuals, married couples and families can afford health insurance This is according to their incomes and affordable health insurance premiums. Those who are not deemed able to afford health insurance according to the Massachusetts benchmarks will not be penalized. An appeal process is available to file with the Connector stating any hardship that may inhibit them from buying health insurance. If that is the case, they may have to pay a tax penalty).

Real Estate Tax Credit for Persons Age 65 and Older (Circuit Breaker)

Certain taxpayers age 65 or older may be eligible to claim a refundable credit on their state income taxes for the real estate taxes or rent paid during the tax year on the residential property they own or rent in Massachusetts that is used as their principal residence. If the credit due the taxpayer exceeds the amount of the total income tax payable for the year by the taxpayer, the excess amount of the credit will be refunded to the taxpayer without interest. For tax year 2015, the maximum credit allowed for both renters and homeowners is $1,070.
To be eligible for the credit for the 2015 tax year: the taxpayer or spouse, if married filing jointly, must be 65 years of age or older at the close of the 2015 tax year; the taxpayer must own or rent residential property in Massachusetts and occupy the property as his or her principal residence; the taxpayer’s “total income” cannot exceed $57,000 for a single filer who is not the head of a household, $71,000 for a head of household, or $85,000 for taxpayers filing jointly; and for homeowners, the assessed valuation as of January 1, 2015, before residential exemptions but after abatements, of the homeowner’s personal residence cannot exceed  $693,000.

Conclusion

Take these 2015 tax changes seriously, the State does. If your returns have not yet been completed, please all Alex Franch, BS EA at 781.849.7200 right away so that he can schedule an appointment and/or file an extension if necessary. You can also schedule an appointment at one of Worthtax’s locations in Quincy, Weymouth and Dedham.

Sources and Resources

Funny Money: Four Odd Types of Taxable Income
Itemized Deductions: Should I Itemize My Tax Deductions
Employer Relief: Affordable Care Act
2014 Income Tax Impact of the Affordable Care Act (ACA) in a NutshellHealth Insurance: Ways to Deduct
Health Insurance Plans: Beware of Penalties
Tax Changes for 2015 – Commonwealth of Massachusetts

 

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