As the new year arrives, for us in tax planning and compliance it also means that we are preparing to send out tax organizers and begin the “tax season.” As you begin collecting your tax information, we wanted to provide the following notes and reminders that may be helpful to you.
- Important tax information forms will generally arrive to you at different times:
W-2s, 1099-Rs, 1099-Misc, 1099-Div, 1099-Int, 1098, 1098-T, 1095-A, 1095-B, and 1095-C must be mailed by January 31, 2015; 1099s from brokerage firms such as Charles Schwab, Fidelity, TD Ameritrade, E-Trade, etc. must be mailed by February 15, 2015; K-1s may arrive as late as September 15, 2015.
- Watch for new tax forms (Forms 1095-A, 1095-B, 1095-C) related to the new health insurance coverage requirements beginning for 2014. Include these forms with your tax information as they will be needed in order to file your tax returns accurately and completely for 2014.
- If you paid federal or state estimated tax payments for tax year 2014, we recommend that you gather and provide the date paid and the check/confirmation number for the payment. We find that inaccuracies with estimated tax payments are among the most common reasons for receiving a tax notice from the IRS or state tax department.
- Upon request, you can often receive a computer generated report from your medical provider(s) and pharmacies that will provide a summary of out of pocket costs you paid for the year. This can be a more efficient and accurate method of determining deductible medical expenses versus organizing and adding up receipts.
- Making a gift to another person directly or in trust of more than $14,000 in 2014 requires that you file a federal (and perhaps Minnesota) gift tax return. Note that making a tuition payment for another person directly to the educational institution or paying a medical expense for another person directly to the medical provider do not count towards the $14,000 annual exclusion amount and do not need to be reported on a gift tax return.
- A charitable contribution (cash or non-cash) of more than $250 to a charitable organization requires that you obtain a written acknowledgement from the organization in order to take a deduction.
- Non-cash charitable contributions totaling more than $500 in 2014 requires that you provide and report certain information for each contribution including the date of contribution, list of items donated, fair market value of each item, and original purchase price and purchase date of each item donated. Many charitable organizations have tools and resources available to assist in organizing and documenting the required information. Software such as It’s Deductible is another popular tool for consideration. A contribution of items such as a motor vehicle or boat requires that you obtain and attach Form 1098-C from the charitable organization.
- A non-cash charitable contribution of property (other than publicly traded securities) valued at more than $5,000 requires that you obtain and attach a qualified written appraisal to document the value of the gift.
- Contributions into a donor advised fund are tax deductible charitable contributions. Grants out of the donor advised fund do not result in an income tax deduction.
Please contact us with any questions that arise as you gather and organize your 2014 tax information.