2014 Health Savings Account Limits

The IRS has released the 2014 contribution limits for Health Savings Accounts.  For an individual with self only coverage the limit will be $3,300 and for family coverage the limit increases to $6,550.  To qualify you must have a high deductible health plan.  High deductible is defined as a deductible that is not less than $1,250 for self only coverage or $2,500 for family coverage.

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Amending 2009 Personal Income Tax Returns

The time to make any changes to your 2009 personal income tax return is coming to a close soon.  April 15, 2013 is the last day you can amend your 2009 income tax return if you have discovered an error on it.  (you may have a bit more time if you filed an extension in 2009)

Changes can be made by filing a form 1040X.  Make sure you give an adequate description of the changes you made or the IRS may reject your amendment.

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Roth Coversions that were performed in 2010 can create taxable income in 2012

If you converted a Roth IRA to a regular IRA in 2010 there was a special rule that allowed you to report the income one half in 2011 and the remainder in 2012 unless you opted out.  If you made a 2010 conversion, don’t forget to report the remaining amount in 2012.

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The IRS has introduced a new simplified method for claiming the home office deduction

For tax years that being on or after January 1, 2013, you can elect to use a simplified method to deduct home office expenses.  The method allows you to take the square footage of the home office times $5 up to 300 square feet with no need for documentation of the expense.  This gives you a maximum deduction of $1,500.  In addition you can deduct your mortgage interest and real estate taxes in full as an itemized deduction on Schedule A.

You still have to meet the exclusive use on a regular basis rule to qualify.

There are other limitations as well:

  • Taxpayers with more than one qualified business use of the same home for a tax year and who elect the safe harbor must use the safe harbor for each qualified business use of the home.
  • Taxpayers with qualified business uses of more than one home for a tax year may use the safe harbor for only one home for that tax year.
  • A taxpayer who has a qualified business use of a home and a rental use of the same home cannot use the safe harbor for the rental use.

This is a long overdue simplification of the rules pertaining to office in the home.  While this is not available for tax returns filed until 2014, it is worth taking into consideration for tax planning for next year.


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IRA Distributions to Charity

The American Taxpayer Relief Act extends the provision that allows tax-free distributions from individual retirement accounts to charities through December 31, 2013.  To qualify the individual must be age 70 1/2 or older with a maximum tax-free distribution of $100,000.

For 2012, a special rule allows the tax-free distribution to be made before February 1, 2013 and it will be treated as if it were made on December 31, 2012.   It’s not too late to take advantage of this provision for your 2012 taxes if you act by the end of January 2013.

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