Friday, January 23, 2015

What's new on Form 1040 for tax year 2014–Part II

IRS has electronically released final tax forms and instructions for the 2014 tax year, including Forms 1040, 1040-A, and 1040-EZ, along with some related schedules. They reflect key health coverage changes that first went into effect in 2014, including the premium assistance credit and the penalty for failing to have coverage, and other changes.

FORM 1040—SCHEDULE A, ITEMIZED DEDUCTIONS

Line 1. Medical and dental expenses. The 2014 standard mileage rate for medically-related use of an auto is 23.5¢ per mile.

Line 21. Unreimbursed employee expenses. The 2014 standard mileage rate for business travel is 56¢ per mile.

Line 29. Limit on itemized deductions. Itemized deductions for taxpayers with adjusted gross incomes in excess of the “applicable amount” ($305,050 for joint filers or a surviving spouse, $279,650 for a head of household, $254,200 for a single individual who isn't a surviving spouse, and $152,525 for marrieds filing separately) may be reduced.

FORM 1040—SCHEDULE B, INTEREST AND ORDINARY DIVIDENDS

Line 1. Interest. Accrued interest on Series EE U.S. savings bonds issued in '84 is taxable.

Line 3. Excludable interest on Series EE or Series I U.S. savings bonds. The exclusion for education related savings bond interest phases out at higher income levels. For 2014, the phaseout begins at modified AGI above $76,000 ($113,950 on a joint return).

FORM 1040—SCHEDULE C, PROFIT OR LOSS FROM BUSINESS

Part II. Expenses. Line 9. Car and truck expenses. The 2014 standard mileage rate for business travel is 56¢ per mile.

Part II. Expenses. Line 13. Depreciation and section 179 expense. See entries for Form 4562, see below.

FORM 4562, DEPRECIATION AND AMORTIZATION

Part I. Election to expense certain tangible property under Sec. 179. For tax years beginning in 2014, the maximum section 179 expense deduction is $500,000. This limit is reduced by the amount by which the cost of section 179 property placed in service during the tax year exceeds $2 million.

Part II. Special depreciation allowance. For qualified property acquired and placed in service after 2011 and before Jan. 1, 2015 (before Jan. 1, 2016 for certain longer-lived and transportation property), a 50% bonus first-year depreciation allowance applies under Code Sec. 168(k).

Part V. Listed property. First-year luxury auto depreciation deduction limits for vehicles first placed in service in 2014 are $3,160 for autos and $3,460 for light trucks or vans. The applicable first-year depreciation limit is increased by $8,000 (not indexed for inflation) for any passenger automobile that is “qualified property” under the 50% bonus first-year depreciation rules of Code Sec. 168(k)and which isn't subject to a taxpayer election to decline bonus depreciation.

FORM 1040—SCHEDULE D, CAPITAL GAINS AND LOSSES

Form 1099-B. Form 1099-B has been redesigned so that the information is reported in boxes that are numbered to match the corresponding line and column on Form 8949 (Sales and other Dispositions of Capital Assets). (Form 8949 is used to report the sale or exchange of a capital asset not reported on another form or schedule. One of the functions of Schedule D is to figure the overall gain or loss from transactions reported on Form 8949.) A new box has also been added at the top of Form 1099-B to tell the taxpayer which box to check when completing Form 8949. These changes are designed to make it easier to complete Form 8949.

Form 1040—SCHEDULE E, SUPPLEMENTAL INCOME AND LOSS

Standard mileage rate. The 2014 standard mileage rate for miles driven in connection with the taxpayer's rental activities is 56¢ per mile.

FORM 1040—SCHEDULE F, PROFIT OR LOSS FROM FARMING

Part II. Farm Expenses—Cash and Accrual Method. Line 10. Car and truck expenses. The 2014 standard mileage rate for business travel is 56¢ per mile.

If you would like more details about these or any other aspect of the law, please do not hesitate to call.
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