The opening day of filing season for 2015. Even though we are filing our 2014 taxes, we call it season 2015.
First the good news—many of the tax laws which were set to expire at the end of 2014 have been extended.
Now for the changes.
1. The Affordable Care Act is in full swing and ready to take a bite out of the refunds (or create liabilities) for those who did not have health insurance in 2014. I will be asking you several questions.
• Did you (and your family) have insurance for the entire year?
• Did you purchase your insurance on the Health Care Exchange?
• If you didn’t have insurance, how many months were you uninsured?
• Did you receive a subsidy? (you should receive a form 1095A from the Health Care Exchange).
2. If you had privately purchased insurance, were on Medicaid or had insurance through your employer, you are likely unaffected. My job as your accountant will end with a simple check mark in a box. This will not affect your fees. If, you have purchased insurance from the exchange and received a subsidy or did not have insurance for part of the year, several calculations and forms will be generated. You may have a tax called “Health Care Individual Responsibility” or “Health Care Credit Recovery” if you had no insurance or received too much of a subsidy for your health care.
3. BIG NEWS—There are new regulations in affect which directly impact those with Rental Property, although all returns with depreciation are affected to some degree. Without a lengthy tax law class, all those who depreciate assets on their personal or business returns will be required to file forms electing new (and in most cases) more favorable depreciation rules. I am currently being advised, that those that do not file these forms will be granted “extra attention” from the IRS along with possible line audits involving asset depreciation and repair expenses.
4. GOOD NEWS—Many of you with rental property will be afforded larger depreciation deductions under the new regulations.
So there you have, it—-the Good, the Bad and the Ugly…for 2015 tax season.
Please feel free to quote me, use whatever information I post or e-mail me with questions. All I ask is that my words receive proper credit.
CELL PHONES AND THE IRS
PLEASE READ MY COMMENTS AT THE END OF THIS ARTICLE.
During an audit which concluded earlier than expected this past summer, an IRS agent and myself found ourselves with some extra time on our hands. We began to discuss areas of audit. I am always interested in hearing what the IRS is interested in, and so I was quite eager to engage this agent in such a discussion.
One of the newer areas the IRS targets is cell phone usage. I was pretty surprised, but the agent went on to explain that when cell phones first appeared they were quite expensive, and almost always used for business, so a complete or partial deduction was not an issue. Fast forward 20 years or so and cell phones are the norm. In fact, most people have cell phones and some have even forgone their land lines.
The IRS has now taken the same position that they have with respect to land lines. The first cell phone line is not allowed. The second can be considered a business line. Generally the first line is the more expensive.
The agent then went on to share some case law. The bottom line was that in order to deduct fees for a cell phone, the taxpayer would have had to establish that they would have not had a cell phone at all were it not for the business activity they were engaged in.
However, I am not a person to back down. This seemed a bit excessive. I could understand the fees for cell phone usage, but the other fees…you know…the ones that create a bill of several pages. Certainly some of of those were deductible! I cited a case of real estate professionals who traveled extensively and needed a smart phone for special applications which often were not free and might require data usage.
There was a silence….and the agent agreed I was correct. Text messages, data plans, and applications fees are deductible provided they are used for business.
So, while the burden of proof remains with the taxpayer, the ability for a partial deduction is available.
Dear readers, fellow professionals and friends. The above incident occurred, as I mentioned, during an audit this past summer. I have always been happy to share findings. However, if you quote me, or replay my information, at least (1) be accurate and (2) quote me–as opposed to plagiarizing. This post is not written so much out of anger (although I am pretty indignant as this is not the first time this person has done this to me). The incorrect article is scheduled to appear in the February 2015 issue of the NATP TaxPro Monthly. Not only is is a mere replay of the e-mails, and a cut and paste of the tax regulations I provided, it is incorrect as it omits the final debate with the agent. I’m wondering if she can run back and get them to correct the article before it hits the presses.
In response to the e-mail this individual sent me, “no I am not kinda sort of famous—I AM famous”.
Photo Credit: https://pixabay.com/en/using-device-phone-mobile-using-1577035/
Rhonda A. Mannes,