Americans Get a Low Grade on Their Knowledge of Income Taxes

By academic standards, Americans would receive an “F” on their knowledge of basic income tax information, according to the results of a survey by personal finance website NerdWallet.

NerdWallet asked 1,015 US adults in early February to take a 10-question quiz on tax basics related to personal finance issues, such as retirement, college savings, and health care. The average score of the test-takers: 51 percent.

Most respondents, for example, did not know the tax implications of popular financial products, such as Roth individual retirement accounts (IRAs), flexible spending accounts, and 529 college plans.

The key takeaway of the survey results, according to the folks at NerdWallet, is that the US tax code is confusing to the average American...

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Source: Jason Bramwell (www.accountingweb.com)

Faster Small-Business Equipment Tax Break Passed by House

The U.S. House of Representatives voted to revive a lapsed tax break for small businesses that encourages them to purchase equipment.

The 272-142 vote was short of the two-thirds majority needed to override a threatened veto by President Barack Obama. One Republican voted against the bill and 33 Democrats joined Republicans in supporting it.

The measure, which includes two narrower provisions for S corporations, would cost the government $79 billion over a decade in forgone revenue, according to the nonpartisan Joint Committee on Taxation

Until Dec. 31, 2014, small businesses were able to immediately write off as much as $500,000 instead of spreading the deductions over multiple years; that level dropped to $25,000 this year. The bill passed Friday would permanently reinstate the higher limit and index it to inflation...

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Source: Richard Rubin (www.accountingtoday.com)

IRS: Tax season to start on time

The IRS announced that tax season will start on time this year and it will begin accepting e-filed and paper returns on Jan. 20, as originally planned (IR-2014-119).

Last year, the agency warned that late passage of legislation extending expired tax provisions could delay the start of filing season (see coverage here). But, in announcing the Service’s ability to start tax season on time, IRS Commissioner John Koskinen said, “We have reviewed the late tax law changes and determined there was nothing preventing us from continuing our updating and testing of our systems.” The on-time start will mark a change from recent filing seasons; practitioners have faced delayed starts the past two years, making those tax seasons even busier than usual.

The IRS also reiterated that, as in earlier years, filing a paper return before Jan. 20 will not accelerate the refund process and reminded taxpayers that e-filing is more accurate than paper filing and results in faster refunds.

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Source: Sally P. Schreiber (www.journalofaccountancy.com)