Warning from IRS Chief for 2014
Internal Revenue Service Commissioner John Koskinen recently appealed to Congress regarding tax breaks that are scheduled to expire. He recommends renewing them, since that appears to be what Congress intends. Of course, Congress actually has to do something to assure that these breaks don't expire - and there's the rub. Inaction being a characteristic of Congress for a number of year now, we may find that inaction in this matter boosts your tax bill come April 15th.
But in addition to boosting your tax bill, Koskinen warns us all about another matter. Despite talk of tax "simplification" - something we've heard literally for decades - it looks like once again our tax code will increase in complexity, leading to even more confusion when we go to file our taxes.
In addition to the uncertainty related to the expiring tax breaks, which include deductions for contributing to charitable organizations directly from IRAs, as well as tax breaks for mortgage interest premiums, there's that little matter of the Obamacare penalty. That's the tax you'll pay to the government if you don't own health insurance. That kicks in when you file your 2014 return.
All in all, it should be an interesting April even if Congress renews the tax breaks, which we hope they will do before year end, but suspect they will do - if they do it at all - after the start of the New Year, which will throw off those who want to file early, since they won't know how to properly calculate their taxes. If that occurs, the IRS may delay the date when you can file your taxes, which in turn will delay the date you receive any refund you may be due, something more and more Americans have come to rely on. (Why more and more of us are receiving refunds isn't clear.)
So next time you hear any chatter about "tax simplification," you might consider ignoring such chatter. It's never panned out before, and we suspect won't any time soon. "More complex" benefits the accountants and lawyers out there, so you've got your reason why we're not holding our breath waiting for simplification.
LATE UPDATE:
The House passed an extension of the breaks Wednesday, but the Senate hasn't acted yet. Looks like they'll just go with the House bill and looks like the extension will be for one year only. Which puts us next year right back where we are today. Oh, the drama of it all.
But in addition to boosting your tax bill, Koskinen warns us all about another matter. Despite talk of tax "simplification" - something we've heard literally for decades - it looks like once again our tax code will increase in complexity, leading to even more confusion when we go to file our taxes.
"It may be the most complicated filing season we've ever had."
In addition to the uncertainty related to the expiring tax breaks, which include deductions for contributing to charitable organizations directly from IRAs, as well as tax breaks for mortgage interest premiums, there's that little matter of the Obamacare penalty. That's the tax you'll pay to the government if you don't own health insurance. That kicks in when you file your 2014 return.
All in all, it should be an interesting April even if Congress renews the tax breaks, which we hope they will do before year end, but suspect they will do - if they do it at all - after the start of the New Year, which will throw off those who want to file early, since they won't know how to properly calculate their taxes. If that occurs, the IRS may delay the date when you can file your taxes, which in turn will delay the date you receive any refund you may be due, something more and more Americans have come to rely on. (Why more and more of us are receiving refunds isn't clear.)
So next time you hear any chatter about "tax simplification," you might consider ignoring such chatter. It's never panned out before, and we suspect won't any time soon. "More complex" benefits the accountants and lawyers out there, so you've got your reason why we're not holding our breath waiting for simplification.
LATE UPDATE:
The House passed an extension of the breaks Wednesday, but the Senate hasn't acted yet. Looks like they'll just go with the House bill and looks like the extension will be for one year only. Which puts us next year right back where we are today. Oh, the drama of it all.
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