An employer-sponsored retirement savings plan is one of the most convenient ways to help build a nest egg for retirement. However, many employees might not be aware that participating in their plan helps benefit their tax situation, too. Broadridge Advisor Solutios has created a concept video that helps explain the potential tax benefits of plan participation, covering the advantages of both traditional pre-tax and Roth accounts. To view the video, or to sign up fo rfree access to all of our content, log into http://www.forefield.com
As December drew to a close, last-minute legislation retroactively extended more than 50 expired federal tax provisions through 2014—but left their status uncertain for 2015. These eleventh-hour changes left little time to react, since the window of opportunity generally closed on December 31, 2014. Nevertheless, you might benefit from one or more of the provisions when you complete your 2014 federal income tax return. Log in to http://www.forefield.com to view the full video.
In one of its final actions, the 113th Congress passed the Tax Increase Prevention Act of 2014. This legislation extends for one year a host of popular tax provisions (commonly referred to as “tax extenders”) that had expired at the end of 2013. All of the following provisions were among those retroactively extended, and are now effective through the end of 2014.
Deduction for qualified higher-education expenses
You may be entitled to a deduction if you paid qualified higher-education expenses during the year–this includes tuition and fees (for yourself, your spouse, or a dependent) for enrollment in a degree or certificate program at an accredited post-secondary educational institution. The deduction doesn’t include payments for meals, lodging, insurance, transportation, or other living expenses. The maximum deduction is generally $4,000. However, if your adjusted gross income (AGI) exceeds $65,000 ($130,000 if married filing jointly), your maximum deduction is limited to $2,000; if your AGI is greater than $80,000 ($160,000 if married filing jointly), you can’t claim the deduction at all.
Deduction for classroom expenses paid by educators
If you’re an educator, you may be able to claim up to $250 of unreimbursed qualified classroom expenses you paid during the year as an “above-the line” deduction. Qualifying expenses can include the cost of books, most supplies, computer equipment, and supplementary materials used in the classroom. Teachers, instructors, counselors, principals, and aides for kindergarten through grade 12 are eligible, provided a minimum number of hours are worked during the school year.
Deduction for state and local general sales tax
If you itemize deductions on Schedule A of IRS Form 1040, you can elect to deduct state and local general sales taxes in lieu of the deduction for state and local income taxes. You can calculate the total amount of state and local sales taxes paid by accumulating receipts showing general sales taxes paid, or you can use IRS tables. If you use IRS tables to determine your deduction, in addition to the table amounts you can deduct eligible general sales taxes paid on cars, boats, and other specified items.
Tax-free charitable donations from IRAs
If you’re age 70½ or older, you can make a qualified charitable distribution (QCD) of up to $100,000 from your IRA and exclude the distribution from your gross income. The distribution must be made directly to a qualified charity by December 31, 2014, and must be a distribution that would otherwise be taxable to you. QCDs count toward satisfying any required minimum distributions (RMDs) that you would otherwise have to receive from your IRA, just as if you had received an actual distribution from the plan. You aren’t able to claim a charitable deduction for the QCD on your federal income tax return.
Deduction for mortgage insurance premiums
Premiums paid or accrued for qualified mortgage insurance associated with the acquisition of your main or second home may be treated as deductible qualified residence interest on Schedule A of IRS Form 1040. The amount that would otherwise be allowed as a deduction is reduced if your AGI exceeds $100,000 ($50,000 if married filing separately), and no deduction is allowed if your AGI exceeds $109,000 ($54,500 if married filing separately).
You may be able to claim an additional first-year “bonus” depreciation deduction, equal to 50% of the adjusted basis of qualified property placed in service during the year. The additional first-year depreciation deduction is allowed for both regular tax and the alternative minimum tax. The basis of the property and the regular depreciation allowances in the year the property is placed in service (and later years) are adjusted accordingly.
Expanded IRC Section 179 expensing limits
Under IRC Section 179, if you’re a small-business owner you can generally elect to expense the cost of qualifying property, rather than to recover such costs through depreciation deductions. The maximum amount that can be expensed for 2014 now remains at $500,000 (the same limit that applied in 2013), rather than dropping to $25,000 had the legislation not passed. The $500,000 limit is reduced by the amount by which the cost of qualifying property placed in service during the taxable year exceeds $2,000,000.
Exclusion of gain–qualified small-business stock
Generally, you’re able to exclude 50% of any capital gain from the sale or exchange of qualified small-business stock provided that certain requirements, including a five-year holding period, are met. However, the temporary increase of the exclusion percentage to 100% that applied in 2013 is now extended to qualified small-business stock issued and acquired in 2014.
Other provisions extended
Other provisions extended by the legislation include:
•The ability to exclude from income the discharge of debt associated with a qualified principal residence
•Provisions related to employer-provided mass-transit benefits
•Special rules for qualified conservation contributions of capital gain real property
•Provisions relating to business tax credits, including the research credit and the work opportunity tax credit
For more advisor visit http://www.forefield.com
A major provision of the Patient Protection and Affordable Care Act (ACA) was the creation of state-based and federal Health Insurance Exchanges for individuals and Small Business Health Options Programs (SHOPs) for small businesses. Beginning November 15, 2014, enrollment in Health Insurance Exchanges and SHOPs will be available. The open enrollment period ends February 15, 2015.
Individuals and small business owners can use Health Exchanges and SHOPs to compare health plans for benefits and price, and select a plan that fits their needs. Coverage begins the first day of the next month for those enrolling between the 1st and 15th days of the month; otherwise, coverage starts the first day of the second following month. So if an individual enrolls on January 16, coverage begins March 1.
To learn more about Health Exchanges and SHOPs, you can refer to the government site, http://www.healthcare.gov. In addition, our Health-Care Reform Resource Center has information you can use to educate your clients and prospects about the Health Exchange programs.
In this era of hyper-connectivity and a 24/7 news cycle, the U.S. stock market tends to react quickly to geopolitical events. But do these events have a lasting impact on U.S. markets or are they mostly global noise? Broadridge Advisor Solutions’ video client alert explores this concept further. Visit http://www.forefield.com to access the full video.
September is National Life Insurance Awareness Month. More than 100 insurance companies and industry trade groups are expected to participate in the National Life Insurance Awareness Month campaign.
While many Americans recognize that it is important to protect loved ones with life insurance, far too many lack adequate coverage. National Life Insurance Awareness Month is intended to prompt Americans to assess their life insurance needs. This is a great time to educate your clients and prospects, and our materials can help.
Resources to consider:
Presentation Template: Life Insurance Basics
Life Insurance Needs Calculator Presentation
Protecting Your Loved Ones with Life Insurance
Why Women Need Life Insurance
In addition, Composer subscribers, look for our Life Insurance Awareness Month greeting cards, which can be personalized with your own title and message.
All Forefield Presentation Center materials can be created in PDF or HTML e-mail formats for easy delivery to clients, and can be fully branded and personalized with your own information.
We’ll continue to pass along timely, relevant information–providing fresh and interesting ways for you to engage and motivate your clients.
General Accounting Office (GAO) Report Reveals Reasons Why People Claim Social Security Benefits Early
Why would people choose to claim their Social Security retirement benefits prior to reaching their full retirement age, when doing so could result in as much as a 30% reduction in monthly benefits? According to the GAO, reasons include an individual’s type of work, employment status, education level, marital status, and other factors.
We’ve created a Client Alert that highlights the report’s findings. Log into your Forefield account or via free trial access @ forefield.com to view this alert in its entirety and/or to share with your clients and prospects.
For more information on the data cited in this Client Alert, as well as information about how the Pension Protection and Affordable Care Act has affected the health coverage options of early claimers, please view the complete report at http://www.gao.gov/products/GAO-14-311