a portability election for estates of
decedents survived by a spouse. An estate can elect to pass any of the
decedent's unused exemption to the surviving spouse. This election is made
on the estate tax return for the decedent with a surviving spouse. Hence, to
take this election the decedent return must be filed in a timely manner.
The annual exclusion for gifts remains the same
at $14,000 for tax year 2014. Any
transfer to an individual is considered a gift as long as you don't receive
something in return for your gift. When making gifts, the donor is generally
the one responsible for paying the gift tax. However, the donee may agree to
pay the gift tax instead. Usually any gift is a taxable gift. However, there
are many exceptions to this rule. Certain gifts are not taxable gifts. For
example, gifts that are not more the annual exclusion for the calendar year
are not taxable gifts. Also, tuition or medical expenses you pay for someone
as not taxable gifts and these gifts fall under the category of educational
and medical exclusions. Furthermore, any gifts you make to your spouse are
not taxable gifts. Additionally, gifts that you make to a political
organization for its use are generally not considered taxable gifts. We know
about charitable contributions but maybe never really thought about these
contributions to qualifying charities as gifts that are deductible.
The annual dollar limit on employee contributions
to employer-sponsored healthcare flexible spending arrangements
(FSA) remains the same at $2,500 for tax year 2014.
There is a limit on the amount that an employee can
defer annually under a health care flexible spending account or Health FSA
to $2,500 for 2014. A Health FSA permits employees to pay for out-of-pocket
medical expenses. Prior to this, the FSA limit was set by the employer and
was usually from $2,500 to $5,000. Some employers for various reasons would
set lower limits. Now with the new employer-sponsored healthcare spending
arrangement act, an employer has less flexibility in setting a Health FSA
annual limit. The $2,500 limit applies only to employee contributions and
does not apply to employer non-elective contributions and they are called
flex credits.
The foreign earned income exclusion rises to
$99,200 for tax year 2014. If you meet certain
requirements, you may qualify for the foreign earned income and foreign
housing exclusions and the foreign housing deduction. If you are a U.S.
citizen or a resident alien of the United States and you live abroad, you
are taxed on your worldwide income unless you qualify to exclude from income
your foreign earnings up to $99,200 in 2014. For these purposes, foreign
house exclusion, and the foreign housing deduction, foreign earned income
does not include any amounts paid by the United States or any of its
agencies to its employees.
The small employer health insurance credit
provides that the maximum credit is phased out based on the
employer’s number of full-time equivalent employees in excess of
10 and the employer’s average annual wages in excess of
$25,400. The maximum credit increases
to 50 percent of premiums paid for small business employers and 35 percent
of premiums paid for small tax-exempt employers. To be eligible for the
credit, a small business employer must pay premiums on behalf of employees
enrolled in a qualified health plan offered through a Small Business Health
Options Program Marketplace. This is also known as (SHOP). Alternatively,
the employer can qualify for an exception to this requirement. This credit
is available to eligible employers for two consecutive taxable years.
Furthermore, the way the
