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We have an Important Announcement!

RPC CPAs + Consultants, LLP will no longer be accepting online credit card payments after March 15, 2019.  Please call our Albuquerque office at 505-883-2727 or your local office and they will process your payment for you.

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RPC CPAs + Consultants, LLP (RPC) has merged with the nationally recognized accounting firm of Carr, Riggs & Ingram, LLC (CRI) and our offices will now operate under the name of Carr, Riggs & Ingram.  

We will continue our tradition of community support and delivering quality audit, accounting, tax, and consulting services - now with enhanced service capabilities available from a regional firm that is one of the Top 20 firms in the U.S. For more informaiton regarding CRI's 50+ office locations, more than 1,800 professionals, or industry and service specializations, visit our new firm's website at www.CRIcpa.com

Blog

Jan 8, 2014

Tax Policy Updates as We Head into 2014

SEC 179 and Bonus Depreciation – Going, Going, Gone…

In the past few years the IRS has been allowing a couple of accelerated depreciation methods in addition to the already accelerated depreciation of MACRS. Section 179 Depreciation and Bonus Depreciation has been a business’ best friend in the ability to have more deductions for a particular tax year of capitalizing more assets.

 

 “Medicare” Contribution Taxes…but NOT Really for Medicare

President Obama signed the Health Care and Education Reconciliation Act of 2010 which created the provision Unearned Income Medicare Contribution Tax (section 1411). On November 26, 2013 the IRS issued the final regulations relating to section 1411. These regulations are effective after December 31, 2013 except for estates and trusts, which is effective after December 31, 2012.

 

 0.9% Hospital Insurance Tax – Earned Income Look Out!

In response to the Patient Protection and Affordable Care Act and Health Care and Education Reconciliation Act of 2010, both signed by President Obama in March, 2010, created a provision and regulations for the Additional Hospital Insurance Tax (HI Tax).

 

Higher Taxes – Higher Pains

Lower- and middle-income individual taxpayers will see no difference in their tax liability due to the new 2013 tax law if applied to their 2012 income. However, high-income individual taxpayers will see a significant increase throughout the future years. President Obama signed the American Taxpayer Relief Act of 2012 which created provisions to include thresholds to either brand new taxes or increases in taxes.

 

Temporary Provisions Expiring – To Extend or Not To Extend

There are a number of temporary provisions which have technically expired as of the end of 2013. Our only hope is that Congress sees fit to retroactively extend some of the more favorable provisions sometime in 2014. These temporary provisions have been crucial to a lot of individual and business tax returns in the past. The majority of these temporary provisions that were not extended, will make deductions go down, and tax liabilities increase.

 

Employers Offering Health Insurance – Large vs. Small

The Patient Protection and Affordable care Act was signed on March 23, 2010 and the Health Care and Education Reconciliation Act of 2010 was signed on March 30, 2010. Within those acts, individuals are required to have health insurance. This, in essence, affects Employers. The IRS created regulations for Employers to follow so individuals have the opportunity to have health care.

 

 Employee Insurance Requirements – 2014 the Year of the Healthy People

On August 27th, 2013 the IRS issued final regulations, effective January 1, 2014, for the issue of individuals required to have health benefit coverage. All non-exempt U.S. citizens and legal residents are required to maintain “minimum essential coverage”. If coverage is not acquired, a penalty will be assessed called the “Shared Responsibility Payment”.

 

Safe Harbor for Home Office Deduction

On January 15, 2013 the IRS issued new regulations to give an optional “safe harbor” method for claiming the home office deduction to taxpayers effective for taxable years after December 31, 2012.

 

FSAs – Budgeting Made Safer and Easier

A flexible spending arrangement (FSA) for medical expenses under a cafeteria plan is health coverage in the form of an unfunded arrangement under which employees are given the option to reduce their current cash compensation and instead have the amount of the salary reduction contributions made available for use in reimbursing the employee for his or her medical expenses. The medical expenses are paid with pre-tax dollars.

 

Rental Real Estate – Fresh Start for Once

Rental real estate activities are being given a “fresh start” in the IRS’ eye in reference to the new Sec. 1411 Net Investment Income Tax of 3.8%. The IRS created a regulation for taxpayers to re-determine their groupings under certain narrowly defined circumstances.

 

Tiered Pass-Through Entities – Passive vs Non-Passive Struggle

Pass-through entity structures need to be looked at closely. With the new law and regulations passed regarding the 3.8% Net Investment Income Tax, the issue between passive and non-passive in the entities will determine if possible additional Medicare tax applies. The additional Medicare tax of 3.8% is applied to passive income. A majority of businesses structured as a tiered entity will have the additional tax if action is not taken.

 

S Corporations Built in Gains Tax – Shorter the Better…

C-Corporations that convert to S-Corporations may still be on taxpayers’ good side up there on Capitol Hill, for the most part. S Corporations are subject to Built-in Gains tax on the disposition of certain assets for a defined period, after they convert from C-Corporations to S-Corporations. These assets are assets acquired prior to a C-Corporation converting to an S-Corporation, or assets acquired when an S-Corporation acquires assets from a C-Corporation in a tax-free transaction.