Tag Archives: tax proposal

Obama’s 2016 Budget Proposal: Part 3 Business Provisions

President Obama's 2016 Budget ProposalIn Part 1 of our three part series, we presented President Obama’s 2016 Budget Proposal for individuals. This proposal was recently released. The tax proposal would increase the taxes on higher-income taxpayers. It would also provide tax breaks for low-to middle-income taxpayers. The provisions we posted on were:

  • Child Care
  • Second Earner Tax Credit
  • Earned Income Tax Credit (EITC)
  • Education Tax Benefits – The American Opportunity Tax Credit (AOTC)
  • Top Capital Gains Rate
  • Itemized Deductions
  • Limit Retirement Account Contributions
  • Buffett Rule

In Part 2, we brought up some highlights that would impact individuals and small businesses regarding gifts and inheritance tax provisions.

Our final post in our three-part series is about President Obama’s 2016 Budget Proposal provisions for businesses. We want to remind you, these are proposals only.

Business Provisions

Section 179 Expensing:

  • Would make the Sec. 179 expense cap $500,000 for 2015 (it is currently at $25,000, down from $500,000 in 2014).
  • Would raise the expense cap to $1 million in 2016. This would make the $1 million permanent with inflation adjustment for future years.

Cash Basis Accounting:

  • Would expand use of the cash method of accounting to small businesses with less than $25 million in average annual gross receipts.
  • Estimated to apply to 99% of all businesses.

Qualified Small Business Stock:

  • Would permanently extend the 100% exclusion on capital gains from sales of tax-qualified small business stock held by individuals for more than five years
  • Would eliminate the inclusion of excluded gain from the Alternative Minimum Tax

Start-Up & Organizational Expense:

  • Would increase and consolidate the deduction for start-up and organizational expenditures

Small Employer Health Insurance Credit:

  • Would expand the credit for small employers to provide health insurance to apply to up to 50 (rather than 25) full-time equivalent employees
  • Phaseout between 20 and 50 employees (rather than between 10 and 25)

Mandatory Employer IRA Payroll Deductions

  • Would require employers with 10 or more employees, who do not have a 401(k) plan, to automatically enroll full-time and part-time employees in an optional IRA payroll deduction plan

Questions About the President Obama’s 2016 Budget Proposal?

Do these provisions and rules confuse you? Are you concerned what the president’s 2016 budget has in store for you, if it is passed? If you have thoughts, questions or concerns regarding how your taxes are filed, contact us or visit any one of our locations. You may also leave your comments below or post on our FacebookGoogle+ or LinkedIn pages.

Maybe you know someone who can benefit from this information, feel free to share:
Linkedin - Joseph Cahill / WorthTaxTwitter - Joseph Cahill / WorthTax / WorthTaxPrepFacebook - Joseph Cahill / WorthTaxGoogle+ - Joseph Cahill / WorthTaxalignable_logo - Joseph Cahill / WorthTax

 

Tax Season is Here!

Time flies – before it slips away, call Alex Franch, EA at 781-849-7200 for your appointment and learn about our client discounts here.

Facebooktwittergoogle_pluslinkedinFacebooktwittergoogle_pluslinkedin

Obama’s 2016 Budget Proposal: Part 2 Gift and Inheritance Provisions

President Obama's 2016 Budget ProposalPresident Obama’s 2016 Budget Proposal for individuals which was recently released, and was presented in Part 1. The blog noted an increase to the taxes on higher-income taxpayers, as well as provide tax breaks for low-to middle-income taxpayers. This week we will discuss some highlights of the President Obama’s 2016 Budget Proposal that would impact individuals and small businesses regarding gifts and inheritance tax provisions. As we mentioned before, please remember, these are proposals only.

If you did not get the chance Part 1, you can click here.

Gift and Inheritance Tax Provisions

Inheritances and Gifts:

  • Would eliminate the current step-up in tax basis at death.
  • Require payment of capital gains tax on the increase in value of securities at the time they are inherited.
  • Generally, a $100,000-per-person, portable-between-spouses exclusion would apply for inherited appreciated assets. This would also have exceptions for surviving spouses, small businesses, charities, and residences, among others.
  • For couples, no tax would be due until the death of the second spouse.
  • No tax would be due on inherited small, family-owned-and-operated businesses unless and until the business was sold. Also, unless any closely held business would have the option to pay tax on gains over 15 years.
  • Couples would have an additional $500,000 exemption for personal residences ($250,000 per individual). This exemption would be automatically portable between spouses.
  • Tangible personal property, other than expensive art and similar collectibles, would be tax-exempt (e.g., bequests or gifts of clothing, furniture, and small family heirlooms).

Inheritance and Gift Tax:

  • Would reinstate the prior, 2009, estate and gift tax rates with lower exclusions (generally at 45% at $3.5 million for estates and $1 million for gifts).

A final reminder, that these are all proposals by the Obama administration and must be approved by Congress. The information is being passed along so you will have an idea of what might happen in the future.

In Part 3 we will put up Obama’s 2016 Budget Proposal for Business Provisions.

Do you have any questions about President Obama’s 2016 Budget Proposal?

Do you have thoughts, questions or concerns about your tax filing? Maybe you need help. Worthtax is not about gimmicks, we don’t waste our money and we wouldn’t waste yours either. WorthTax is a serious business that wants to help you get every penny back that belongs to you. WorthTax has ultra convenient services. Feel free to contact us, leave your comments below or post to on our FacebookGoogle+ or LinkedIn pages.

Maybe you know someone who can benefit from this information, feel free to share:
Linkedin - Joseph Cahill / WorthTaxTwitter - Joseph Cahill / WorthTax / WorthTaxPrepFacebook - Joseph Cahill / WorthTaxGoogle+ - Joseph Cahill / WorthTaxalignable_logo - Joseph Cahill / WorthTax

 

Tax Season is Here!

Time flies – before it slips away, call Alex Franch, EA at 781-849-7200 for your appointment and learn about our client discounts here.

Facebooktwittergoogle_pluslinkedinFacebooktwittergoogle_pluslinkedin

President Obama’s 2016 Budget Proposal: Part 1 Individual Provisions

President Obama's 2016 Budget ProposalPresident Obama’s 2016 Budget Proposal was just released and includes a number of tax proposals that would increase the taxes on higher-income taxpayers and provide more tax breaks for low- to middle-income taxpayers. The following are some highlights of the proposal that would impact individuals and small businesses – but remember, these are proposals only.

Individual Provisions

Child Care:

  • President Obama’s 2016 Budget proposal would allow a credit of up to $3,000 (50% credit for up to $6,000 of expenses per child), for each child under the age of 5.
  • Would enable gainful employment of the parent(s) or other qualified taxpayer.
  • The regular credit for those ages 5 through 12 would begin to phase out at $120,000, instead of $15,000 under the current law.
  • Flexible spending accounts for child care would be eliminated.

Second Earner Tax Credit:

  • Would provide a new tax credit up to $500 (5% of the first $10,000 of earnings for the lower-earning spouse) for joint filers with two wage earners.
  • Would begin to phase out at $120,000 income.
  • Would fully phase out when family income reaches $210,000. It is estimated that this new credit would benefit 24 million joint filers.

Earned Income Tax Credit (EITC)

  • Would double the EITC for workers without a child. It would also increase the credit applicability for childless workers with earnings up to 150% of the federal poverty level (currently about 125%).
  • Would expand the applicability of the EITC to workers age 21 to 66 (currently 24 to 64).

Education Tax Benefits – The American Opportunity Tax Credit (AOTC):

  • Would be expanded from the current AOTC to cover five years of post-secondary education
  • The current $2,500 tax credit would be adjusted for inflation.
  • The refundable portion of the AOTC would be increased to $1,500.
  • Part-time students would be eligible for a $1,250 AOTC (up to $750 refundable).
  • Duplicative and less effective provisions, including the Lifetime Learning Credit, the tuition and fees deduction, the student loan interest deduction (for new borrowers), and Coverdell accounts (for new contributions) would be repealed or allowed to expire.
  • The credit would be better coordinated with Pell Grants with the President Obama’s 2016 Budget proposal.

Top Capital Gains Rate:

  • Would raise the top effective capital gains and qualified dividends tax rate to 28% (24.2% plus the 3.8% net investment income tax).
  • For couples, the 28% rate would apply where income is more than $500,000 annually.

Itemized Deductions:

  • Would limit to 28% the value of itemized deductions and other tax preferences for married taxpayers with incomes over $250,000 and individual taxpayers with income over $200,000.
  • The limit would apply to all itemized deductions.
  • The limit would also apply to other tax benefits, such as tax-exempt interest and tax exclusions for retirement contributions and employer-sponsored health insurance.

Limit Retirement Account Contributions:

  • Would prohibit contributions to and accruals of additional benefits in tax-preferred retirement plans and IRAs once balances are about $3.4 million.
  • Would be about enough to provide an annual income of $210,000 in retirement.

Buffett Rule:

President Obama’s 2016 Budget proposal would implement the Buffett Rule. This rule, which is a carryover from prior year budget proposals, would require the wealthy to pay at least a 30% effective tax rate.

What’s Next?

These are all proposals by the Obama administration. Keep in mind that they still must be approved by Congress. The information is being passed along so you will have an idea of what might happen in the future.

In Part 2 we will talk about Gift and Inheritance tax provisions.

Questions About the President Obama’s 2016 Budget Proposal?

Do these provisions and rules confuse you? Are you concerned what the president’s 2016 budget has in store for you, if it is passed? If you have thoughts, questions or concerns regarding how your taxes are filed, contact us or visit any one of our locations. You may also leave your comments below or post on our FacebookGoogle+ or LinkedIn pages.

Maybe you know someone who can benefit from this information, feel free to share:
Linkedin - Joseph Cahill / WorthTaxTwitter - Joseph Cahill / WorthTax / WorthTaxPrepFacebook - Joseph Cahill / WorthTaxGoogle+ - Joseph Cahill / WorthTaxalignable_logo - Joseph Cahill / WorthTax

 

Tax Season is Here!

Time flies – before it slips away, call Alex Franch, EA at 781-849-7200 for your appointment and learn about our client discounts here.

Facebooktwittergoogle_pluslinkedinFacebooktwittergoogle_pluslinkedin