Tax Breaks for 2014

For those who are looking ahead to their 2014 tax returns, there are a number of tax breaks that will continue for this year. However, there are also tax breaks that have run their course and will not be available either.

Navigating your way through tax season takes a little research, effort and perhaps some assistance from your local Santa Barbara CPA. When it comes to Santa Barbara tax preparation, having the assistance of a proper CPA or tax attorney is always most welcome.

A Sample of Current Tax Breaks for 2014

Earned Income Tax Credit (EITC): One of the more popular tax credits, you must meet certain requirements in order for the EITC to occur. However, you must properly note the credit on your tax form in order to receive its benefits.

Educational Tax Credit: This is one where you or someone you support is enrolled and paying expenses for higher education. In addition, you may be able to deduct qualified tuition and fees from your income tax as well up to $4,000. In addition, the American Opportunity Tax Credit offers up to $10,000 over four years for those who attend state universities.

Affordable Care Act: One tax benefit that arrives in 2014 is the tax credits for individuals and families. The average tax credit will be roughly $4,000 apiece for those who purchase health insurance on the marketplace.

Plug-In Electric Drive Vehicle: For qualified plug-in vehicles that were acquired after the last day in December, 2009, a credit of $2,500 exists. Plus, there are additional tax credits for the total amount of kilowatts per hour it draws for its battery and so forth until it reaches the maximum of $7,500. This applies to new and used plug-in vehicles.

In addition to tax breaks, there are also new rules for different areas of the tax code starting in 2014. They include the Pease Limitations.

Named after Representative Don Pease, these are new limitations on the number of deductions that individuals and married couples can take on their tax forms. In essence, an individual making $254,200 or more and married couples making $305,050 or more will face limitations on itemized deductions by 3% of the amount of your adjusted gross income will exceed the thresholds that have been set. In other words, the more money you make, the greater the limits on your deductions.

ACA Penalty: For those who do not have health insurance and do not meet certain exemptions, there is a flat penalty fee that was $95 for individuals who paid on their 2014 tax return. Next year however, that fee increases to $325 and then goes up to $695 in 2016.

Overall, for those who are starting to calculate what they owe for next year’s tax returns, there is some trouble ahead certain tax penalties kick in and others are raised. However, there are still plenty of the standard deductions that apply for the following year that you can take advantage.

Contact us at Santa Barbara Tax and Accounting for more information about the 2015 tax return policies, exemptions and deductions that are available – our tax preparation specialists are waiting to assist you.