IRS Issues Guidance On Allocation Of Federal Rehabilitation Tax Credits
While it doesn’t address any safe harbors for allocation of state-level rehabilitation credits, Revenue Procedure 2014-12 does provide safe harbors for allocation of the federal tax credits. This Rev. Proc., issued on December 31, 2013, also provides helpful examples to assist taxpayers in complying with this complex area of partnership taxation.
2013 Tax Filing Season Starts Later Than 2012’s
The IRS announced this month that 2013 tax returns can begin being filed on January 31, 2014, a day later than this past year. Citing the need for more time to program their computer systems for the coming filing season, coupled with the 16 day government shut down in October, more time was needed this year to be ready for the nearly 150 million tax returns processed annually.
Guidance On In-Plan Roth Rollovers Released
For employees of organizations that offer Roth 401(k)’s, guidance was issued this week to clarify the treatment and availability of the option to rollover traditional pre-tax 401(k) balances to the Roth post-tax 401(k).
This option was first codified with the passage of American Taxpayer Relief Act of 2012 (this being the last-minute act passed January 1, 2013 that caused problems with tax return filing season this past year).
The guidance contained in IRS Notice 2013-74 explains the mechanical process of rolling balances over between the pre and post tax varieties of 401(k)’s. It addresses everything from what types of plan balances can be rolled over (such as earnings, vested and non-vested portions etc), the plan amendments necessary to allow for rollovers, top-heavy testing, and tax withholding considerations. Read more from the Journal of Accountancy here.
This guidance will be very helpful to plan administrators in implementing such rollovers. Keep in mind that if you make a rollover from a traditional deferred 401(k) to a Roth 401(k), that amount rolled over will be subject to income tax in the year the funds are moved. The option of spreading the rollover over two tax years that applied for rollovers occuring in 2010 no longer applies, thus the entire amount will be taxable in one year and usually requires tax planning to ensure that underpayment penalties are avoided.
Regulations Issued For New Additional Medicare & Net Investment Income Taxes
The IRS issued final regulations for the new 3.8% net investment income tax and the .9% additional Medicare surtax this week. These are new taxes effective in 2013 that became law with the Affordable Care Act’s passage in 2010.
There were a few clarifications in these Regulations from the previous Proposed Regulations issued on the net investment income tax. The areas clarified include the calculation of net investment income, treatment of certain trusts, interaction of passive activity rules with the new tax, and the method of calculating the gain or loss on the sale of a partnership or S corporation interest.
The new guidance for the additional Medicare surtax covers primarily employer-related or self-employed issues such as clarifying withholding procedures, employer liability for underwithholding, reporting and payment obligations, and claims for refunds.
This guidance will be invaluable in preparing tax returns this coming season as many of the issues clarified with the Regulations are put into practice for the first time.
Ohio Seeks to Refund Tax Overpayments to Businesses Update
Govorner Kasich has announced plans for a new statutory policy of refunding overpaid taxes to businesses, even if the business is unaware of the overpayment. This goes against the previous policy of simply holding any overpayments unless the business requested them by filing the appropriate tax returns and refund requests.
Ohio Tax Commissioner Joe Testa also recently announced an initiative to contact businesses where a potentially unknown overpayment exists. Citing modifications to the State’s systems and culture, he vowed to ensure the taxpayer’s interests are protected now and in the future.
To find out if your business may be due a refund of overpaid taxes, call 1-800-304-3211 or email the Dept. of Taxation here.
2014 Standard Mileage Rates Announced
On December 6, 2013, the IRS announced the standard mileage rates for 2014:
- 56 cents per business mile
- 23.5 cents per medical or moving mile
- 14 cents per charitable mile
