The IRS clarified in IR-2014-107 the impact that a 2014 IRA rollover has on the one-per-year limit on tax-free rollovers between IRAs. Before 2015, the one-per-year limit applies only on an IRA-by-IRA basis (that is, only to rollovers involving the same IRAs).

BEGINNING IN 2015, the limit will apply by AGGRAGATING ALL of an individual’s IRAs, effectively treating them as if they were one IRA for purposes of applying the limit.

To allow time for transition to the new interpretation, the IRS announced shortly after the January 2014 Tax Court decision that the new interpretation would not apply before January 1, 2015. A distribution from an IRA received during 2014 and properly rolled over (normally within 60 days) to another IRA will have no impact on any distributions and rollovers during 2014 involving any other IRAs owned by the same individual.

This will give IRA owners a fresh start in 2015 when applying the one-per-year rollover limit to multiple IRAs.

This is the time of year when the IRS presents new values/limitations on all sorts of items in the tax code. Following are several that you will want to be aware of:

Section 179 (immediate write-off of equipment purchases) is currently limited to $25,000 for tax year 2014. (We will see if this is changed now that the election has passed.)

Standard Mileage Rates for 2015
= 56 cents per mile for business miles driven
= 23.5 cents per mile driven for medical or moving purpose
= 14 cents per mile driven in service of charitable organizations

New earnings limit for Social Security tax = $118,500

IRA contributions:

• Roth: Stayed the same at $5,500
• Traditional: Stayed the same at $5,500
• Catch—up: Stayed the same at $1,000

401(k) contributions

• Increased to $18,000
• Catch-up contributions increased to $6,000

SEP IRA contributions

• Company may contribute up to 25% of compensation or %53,000 (up from $52,000 in 2014), whichever is less
• Compensation limit is 20% for sole proprietors

SIMPLE IRA contributions (same as 2014)

• Salary deferral up to $12,500
• $3,000 catch-up contribution if age 50 or older
• Employer match (up to 3%) or non-elective contribution (2%)

On October 23, the IRS issued a news release (IR 2014-99) announcing cost-of-living adjustments affecting dollar limits on tax-deferred contributions to retirement plans and eligibility for retirement-related benefits for the 2015 tax year.

Among the changes to the limits, the elective deferral for employees who participate in Section 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan will increase to $18,000 from $17,500. The catch-up contribution limit for participants in those same plans who are 50 or older will increase to $6,000 from $5,500.

The 2015 adjustments reflect a 1.6 percent increase in the consumer price index for urban wage earners and clerical workers (CPI-W) for the 12-month period ended in September. Deferred compensation plans also are affected by the adjustments, which are similar to those used to adjust Social Security benefit amounts.

The list for the 2015 tax year includes increases to some limits, but others remain unchanged “because the increase in the Consumer Price Index did not meet the statutory thresholds for their adjustment,” the news release said.

The limits, both changed and unchanged, include:

>>>>>the annual contribution limit for a defined contribution plan under Section 415(c)(1)(A), from $52,000 to $53,000;
>>>>>the annual benefit limit for a defined benefit plan under Section 415(b)(1)(A) remains $210,000;
>>>>>the annual contribution limit for contributions to individual retirement accounts remains $5,500;
>>>>>the adjusted gross income phaseout limit for married couples filing jointly and making contributions to a Roth individual retirement account, from a phaseout range of $181,000 to $191,000 in 2014 to a range of $183,000 and $193,000 for the 2015 tax year;
>>>>>the annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C) and 408(k)(6)(D)(ii), from $260,000 to $265,000;
>>>>>the dollar limit under Section 430(c)(7)(D)(i)(II) for determining excess employee compensation with respect to single-employer defined benefit pension plans for which a special election under Section 430(c)(2)(D) is made, from $1,084,000 to $1,101,000 for 2015;
>>>>>the phaseout limits on modified adjusted gross income affecting deductions for contributions to traditional IRAs taken by individual taxpayers and heads of household who are covered by a workplace retirement plan, from $60,000 to $70,000 for 2014 to $61,000 to $71,000 for 2015;
>>>>>the phaseout limits on modified AGI affecting deductions for contributions to traditional IRAs taken by married couples filing jointly in which the spouse who makes the IRA contribution is covered by a workplace retirement plan from $96,000 to $116,000 for 2014 to $98,000 to $118,000 for 2015; and
>>>>>the annual compensation limit for defining “key employee” in a top-heavy plan under Section 416(i)(1)(A)(i), is unchanged at $170,000.

We encourage our clients who do online purchases and DO NOT pay Michigan Sales to to self report. The problem is tracking during the year where you have paid sales tax (ignore the purchase) and where you have not! (eas)
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As we all know, the growth in e-commerce has put brick-and-mortar retailers at a disadvantage to retailers with no physical presence, because retailers with a physical presence are required to collect sales tax regardless of whether the sale occurs in a physical store, or remotely. States have long required residents to self-report their online purchases and pay sales and use taxes on such purchases but compliance with this self-reporting regime has been weak at best.

In a time of tight state budgets, what can a state do to ensure it receives sales and use taxes from online purchases?

The State of Colorado enacted a statute that requires out-of-state retailers to notify their Colorado customers that they are required to self-report Colorado use tax; send those customers an annual detailed list of their purchases; and notify the department of the name, address and total amount of purchases for each of its Colorado customers. Predictably, out of state retailers were not happy.

In June 2010, the Direct Marketing Association (DMA)—a group of businesses and organizations that market products via catalogs, advertisements, broadcast media, and the Internet—sued the Colorado Department of Revenue and argued that the regulations violated the Commerce Clause by discriminating against interstate commerce. The district court granted DMA’s request for an injunction and later granted summary judgment in favor of DMA. The U.S. Court of Appeals for the Tenth Circuit did not reach a decision on the merits of the appeal and instead held that the Tax Injunction Act deprived the district court of jurisdiction to enjoin Colorado’s tax collection effort.

The case is now before the Supreme Court (Direct Mktg. Ass’n v. Brohl, U.S., No. 13-1032), with oral arguments scheduled on December 8. The case presents a plethora of legal issues, including:

>>>>>Does the Tax Injunction Act apply to non-taxpayers such as the out-of-state retailers? The DMA notes that a prior Supreme Court case, Hibbs v. Winn, 542 U.S. 88 (2004), held that the TIA doesn’t apply to non-taxpayers or outsiders whose own liability isn’t at issue. The DMA said the out-of-state retailers are such non-taxpayer outsiders.

>>>>>Will the Supreme Court agree with the State of Colorado’s contention that the TIA is applicable to “non-taxpayers who play an important role in the tax system or the taxable event.”

If Colorado wins, tax professionals should expect most, if not all, states to enact statutes similar to the one in Colorado. In turn, this would require the preparers of state tax returns to ensure compliance by include sales and use tax information on such returns.

The maximum amount of earnings subject to Social Security tax will rise to $118,500 in 2015, from the current $117,000, the Social Security Administration announced October 22.

The SSA news release, available here, said that about 10 million workers will pay higher taxes because of the increase in the taxable maximum. Monthly benefits for Social Security and Supplemental Security Income recipients will go up 1.7 percent, the administration said, with that cost-of-living adjustment beginning with Dec. 31 payments to SSI recipients and January payments to Social Security recipients. The Social Security and Medicare tax rate will remain at 7.65 percent for employees and 15.30 percent for self-employed, according to an administration fact sheet available at www.IRS.gov.