The current legislative and political landscape is confusing and potentially alarming to American business owners, The Tax Saving Professionals, experts in tax code and tax law offers the good, the bad and the reality of the current pending legislation and what it can mean to high net worth individuals and American Business Owners.
Sebastian, Fl…”The current legislative and political landscape is confusing and potentially alarming to American business owners,” says Ray Phair, Chief Operating Officer of The Tax Saving Professionals. The Tax Saving Professionals have developed a proprietary list of more than 400 tax deduction strategies that helps high net worth individuals and American business owners save thousands of dollars on their taxes.
Phair points out that the reality lately about taxes, fiscal cliff, tax deadlines and extensions for ObamaCare is likely one big blur to most business owners and individuals as the information is sporadic and when it comes it is fast and confusing. “We have a staff of tax professionals, lawyers and CPA’s whose sole function it is to monitor all the activities in Washington that can have an impact on our clients and American Business owners,” says Phair.
Experts at tax law, tax code and tax strategy, The Tax Saving Professionals have helped more than 7,000 clients since 1997 save more than half a billion dollars in taxes. In the interest of clarity, or at least an in-the-moment assessment of what the current governmental legislation portends for high net-worth individuals and American business owners, The Tax Saving Professionals offer below a manageable, succinct and comprehensible overview of these large looming issues designed to quickly educate and illuminate the good, the bad and the reality of what could be on the horizon for high net-worth individuals and American Business Owners.
2013 Tax Returns & Tax Refunds
The first and easiest topic is that 2013 Tax Returns (income earned in 2013) still have to be filed by their normal due dates, March 17, 2014 for corporations and April 15th 2014 for individuals.
• Several news agencies released a confusing report saying that there will be a two week delay in the filing “DEADLINE” date for these returns. This was not true.
• The truth is that the IRS will not accept returns until two weeks later than normal earliest filing date which was January 21st 2014 (for the income earned in 2013).
• Due to the October Government Shutdown, the IRS will now accept returns somewhere between January 28th and February 4th, still not a firm date. The IRS has said this will cause a two week delay in sending out tax refunds checks as well.
For the people that prefer to file early, the best and fastest way to file is to file electronically with direct deposit selected to electronically move the money overnight on the day your refund is approved.
ObamaCare Enrollment Extension
Whether the plan itself is “sick” is a matter of continuing debate and while the plan at large is in a politically comatose state, there is no firm prognosis on all of the ramifications and implications of the Obama Care Health Care Plan yet. However, here are some facts as they currently present themselves:
• ObamaCare enrollment extensions are a result of the ObamaCare website not working on the date it was rolled out. For the people that are mandated to get care under the “Affordable Care Act” there is a tax penalty if you do not sign up. The extension does not cover people under employer health plans or government coverage such as Medicaid and Medicare.
• The penalty is known as the “shared responsibility payment.” Someone who is required to, but does not have health coverage in 2014, would pay this penalty with their 2014 tax return, not due until April 15, 2015.
• The penalty is $95 or 1% of income, whichever is greater, and increases quickly to at least $325 for 2015 and $695 for 2016. Watch the loophole in this law get exposed in short order as the law also states that the Act allows individuals to go without coverage for up to three months at a time.
• The law says the open enrollment window is open through March 31. But, if individuals waited until that day to register, their coverage wouldn’t begin until May, long after the three-month clock that started Jan. 1 reached zero, meaning a Feb. 15 application deadline would have to have been filed, the extension removes this confusion.
The Fiscal Cliff
The Fiscal Cliff legislation raised tax rates for upper income taxpayers beginning on January 1, 2013. It involved a simultaneous increase in tax rates and a decrease of government spending through sequestration and was based on a series of previously enacted laws in the 2010 Tax Relief Act and the Budget Control Act of 2011.
So, what happens on January 1, 2014 without further legislation?
• In the year 2014, the tax rates for upper income filers will remain the same; however, the taxable income thresholds for those rates will increase.
• For married joint filers, the threshold for the top 39.6% rate is projected to move from $450,000 to $457,600.
• For single filers, those same thresholds are projected to move from $400,000 to $406,750.
• All the marginal rates for income below that level have corresponding increases. Actual tax brackets for 2014 should be released sometime in December 2013.
In conclusion, Phair makes the following observations about the above noted issues: “We anticipate naturally a significant wave of tax noise for the next several months due not only to the heated political environment surrounding all of these issues, but moreover the mechanism for adoption, implementation and execution of these various moving parts on so many constituencies in the country, such as the American people and business owners. However, the likelihood of any meaningful legislation being passed, at this time, remains slim.”