tax time stopwatchSome final tips and trends as we approach the April 15, 2015 tax deadline.

Each tax season is unique. In 2013, we had the impending doom of the “fiscal cliff.” 2014 was the first year of the Affordable Care Act tax increases. As we approach the deadline for filing 2014 tax returns, we’re again seeing some concerning trends that may impact your taxes and tax filing. Here are a few examples:


  • There’s less time to prepare. Brokerage statements (Form 1099s) and partnership forms (Schedule K-1s) are being sent out later than ever before. Based on the number of outstanding documents and subsequent rounds of changes, we expect to file more extensions and possibly have to amend tax returns this year.
  • Brokerage statement 1099s are more prone to errors. Not only are they late, but these statements may have missing cost basis information, incorrect proceeds calculations, and other potential errors that can have a major tax impact.
  • Not enough tax is being withheld for stock options. Most companies automatically withhold 25% of the proceeds for taxes, but oftentimes the transaction revenue will place you in a higher tax bracket. These transactions require a little extra planning to avoid an unexpected tax bill.
  • As income goes up, you’re taxed on more of it. Itemized deductions may be reduced for higher wage earners – up to 80%. The highest earners may be rewarded with both higher income tax rate and capital gains tax rates. You need to verify that your tax withholding/payments takes all of this into account.
  • We’re still not accounting for the Affordable Care Tax. Those who qualify will pay an additional 0.9% of Medicare Payroll Tax and up to 3.8% more tax on net investment income. Contributing to the confusion is that the Medicare Payroll Tax is based on Medicare Wages, which are often higher than Taxable Wages (W-2 Box 1).

Where do we go from here?

The Tax Increase Prevention Act of 2014 has expired. That means at this point in 2015 the extra tax relief is gone for both consumers and businesses. Unless there is another extension passed, individuals and families will lose 2015 deductions for state and local sales or income taxes, mortgage insurance, and tuition expenses. Businesses will lose deductions for certain property, equipment, and software, plus R&D tax credits.

We hope there will be another extension passed in 2015, and maybe this time it will be permanent. Since hope is not a good strategy, it’s better to be prepared for the worst and start planning just in case you need to pay more taxes paid on 2015 earnings.

What can you do today?

Here is some last-minute advice as we close in on the 2015 filing deadline and beyond:

  • Get your tax information in to your CPA early. Even if you’re still missing a few pieces, we can start the work now,and then just make adjustments as your final tax documents arrive.
  • Use your tax organizer checklist to make sure that you’ve included all tax documents. Compare the information to last year, and highlight anything that is either missing or very different so we can help investigate.
  • Double check your brokerage statement 1099s for errors. Document potential problems, as sometimes revised 1099s fail to make it to the IRS. You’ll want to have this on hand if you ever get an IRS phone call.
  • See your CPA during the year. There’s very little that we can do today that will impact 2014 returns. That ship has sailed. Get proactive for 2015 and schedule an appointment by mid-year.

As always, we’re here to help. If you have any questions, please call one of the CPAs at Bach, James, Mansour & Company. Chances are we’ll be in the office, regardless of the time of day!

Neal Bach, CPA