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McKonly & Asbury Webinar - 2014 Tax Update
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McKonly & Asbury Webinar - 2014 Tax Update

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This webinar was hosted by Dan Matarrese (Tax Senior Manager) from McKonly & Asbury. The presentation provided an annual “State of the Tax Union” address. We detailed the relevant changes in our tax …

This webinar was hosted by Dan Matarrese (Tax Senior Manager) from McKonly & Asbury. The presentation provided an annual “State of the Tax Union” address. We detailed the relevant changes in our tax system for 2014 while also discussing planning opportunities that exist in our current environment. Our team will provided a unique look at the most recent IRS statistics to examine the economic results that our tax policies are producing.

Check out our Upcoming Events page for news and updates on our future seminars and webinars at http://www.macpas.com/events/

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  • 1. TITLE SLIDE
  • 2. 08/27/14
  • 3. 2014 TAX UPDATE Presented by: Dan Matarrese, CPA Senior Tax Manager
  • 4. AGENDA • Review basic framework of our individual tax system • Look at most recent stats on the results of our system • Discuss planning opportunities
  • 5. ORDINARY INCOME RATES 10%, 15%, 25%, 28%, 33%, 35%, 39.6% tax brackets are permanent; Thresholds for highest brackets are: • $457,601 for married-filing-jointly and surviving spouses • $432,201 for head-of-households • $406,751 for singles
  • 6. LONG TERM CAPITAL GAIN • Two lowest tax brackets pay 0% • Those in the 25% - 35% bracket pay 15% • Those in the highest bracket pay 20% Note: These rates apply to Qualified Dividends
  • 7. AFFORDABLE CARE ACT – THE TAX IMPACT Additional Medicare Surcharge • Applies to individuals with modified AGI greater than $200K, or $250K if married • Additional .9% on earned income • 3.8% on “net investment income” Note: Employers must withhold the additional tax from wages paid in excess of $200,000, without regard to the person's filing status.
  • 8. ALTERNATIVE MINIMUM TAX For 2014, Exemptions amounts are increased to: • $82,100 for married couples filing jointly • $52,800 for single individuals • $41,050 for married filing separate Amounts are set to permanently increase for inflation
  • 9. ITEMIZED DEDUCTION & EXEMPTION PHASEOUT Applies when AGI exceeds • $305,050 (joint returns) • $279,650 (head of household) • $254,200 (single filers)
  • 10. ESTATE & GIFT TAX 2012 estate, gift and GST tax rules were made permanent, but top rate increases from 35% to 40% • 2012 Estate Exemption: $5,120,000 • 2013 Estate Exemption: $5,250,000 • 2014 Estate Exemption: $5,340,000 Note: Portability of Exemption is made permanent
  • 11. SUMMARY OF FEDERAL INCOME TAX DATA - 2011 Number of Returns* AGI ($ millions) Income Taxes Paid ($ millions) Group's Share of Total AGI (IRS) Group's Share of Income Taxes Income Split Point Average Tax Rate All Taxpayers 136,585,712 8,317,188 1,042,571 100% 100.00% Top 1% 1,365,857 1,555,701 365,518 18.70% 35.10%> $388,905 23.50% Top 5% 6,829,286 2,818,879 588,967 33.90% 56.50%> $167,728 20.90% Top 10% 13,658,571 3,774,978 711,663 45.40% 68.30%> $120,136 18.90% Top 25% 34,146,428 5,640,585 892,616 67.80% 85.60%> $70,492 15.80% Top 50% 68,292,856 7,356,627 1,012,460 88.50% 97.10% > $34,823 13.80% Bottom 50% 68,292,856 960,561 30,109 11.55% 2.89% < $34,823 3.13% *Does not include dependent filers.
  • 12. TOTAL INCOME TAX SHARES, 2001-2011 Year Total Top 0.1% Top 1% Top 5% Top 10% Top 25% Top 50% Bottom 50% 2001 100% 15.68% 33.22% 52.24% 63.68% 81.56% 95.10% 4.90% 2002 100% 15.09% 33.09% 52.86% 64.63% 82.67% 95.79% 4.21% 2003 100% 15.37% 33.69% 53.54% 64.89% 82.76% 95.93% 4.07% 2004 100% 17.12% 36.28% 56.35% 67.30% 83.82% 96.13% 3.87% 2005 100% 18.91% 38.78% 58.93% 69.46% 85.07% 96.41% 3.59% 2006 100% 19.24% 39.36% 59.49% 70.08% 85.49% 96.59% 3.41% 2007 100% 19.84% 39.81% 59.90% 70.41% 85.71% 96.64% 3.36% 2008 100% 18.20% 37.51% 58.06% 69.20% 85.57% 96.90% 3.10% 2009 100% 16.91% 36.34% 58.17% 69.89% 86.74% 97.54% 2.46% 2010 100% 17.88% 37.38% 59.07% 70.62% 87.11% 97.64% 2.36% 2011 100% 16.14% 35.06% 56.49% 68.26% 85.62% 97.11% 2.89%
  • 13. NUMBER OF FEDERAL INDIVIDUAL INCOME TAX RETURNS FILED 2001-2011 (IN THOUSANDS) Year Total Top 0.1% Top 1% Top 5% Top 10% Top 25% Top 50% Bottom 50% 2001 119,371 119 1,194 5,969 11,937 29,843 59,685 59,685 2002 119,851 120 1,199 5,993 11,985 29,963 59,925 59,925 2003 120,759 121 1,208 6,038 12,076 30,190 60,379 60,379 2004 122,510 123 1,225 6,125 12,251 30,627 61,255 61,255 2005 124,673 125 1,247 6,234 12,467 31,168 62,337 62,337 2006 128,441 128 1,284 6,422 12,844 32,110 64,221 64,221 2007 132,655 133 1,327 6,633 13,265 33,164 66,327 66,327 2008 132,892 133 1,329 6,645 13,289 33,223 66,446 66,446 2009 132,620 133 1,326 6,631 13,262 33,155 66,310 66,310 2010 135,033 135 1,350 6,752 13,503 33,758 67,517 67,517 2011 136,586 137 1,366 6,829 13,659 34,146 68,293 68,293
  • 14. BONUS DEPRECIATION Not Yet! •Bill passed by the House, Senate has yet to vote •President Obama threatened to veto even if passed
  • 15. PLANNING OPPORTUNITIES Timing is key! • Think about timing your income and expenses to best maximize your tax benefit • Avoid additional income in years you are in highest bracket • Use expenses to offset income in highest rate years (watch for AMT and itemized deduction phaseout).
  • 16. PLANNING OPPORTUNITIES Net Investment Income Tax • Entity Structure is Key o Active S-Corporations - LLCs can elect to be S-Corps. - Sale of active S-Corp Stock is exempt as well from NIIT • Grouping Activities • Real Estate Professionals o Escape NIIT on Net Rental Income • Use of Trusts o Could help to reduce NIIT
  • 17. 08/27/14
  • 18. 08/27/14