Inflation-adjusted 2014 figures for health, charitable, compliance and special entity items

A number of tax figures are adjusted each year for inflation based on the average Consumer Price Index (CPI) for the 12-month period ending the previous Aug. 31. The Aug. 2013 CPI has been released by the Labor Department. (U.S. Department of Labor, Consumer Price Index (for all-urban consumers), 9/17/2013) Using the CPI for Aug. 2013 (and the preceding 11 months), RIA calculated and reported in a separate article (see ¶ 17) the increases for 2014 to the break points in the income tax brackets, the standard deduction amounts, the personal exemption amount, and a number of other items. This article provides RIA-calculated adjustments for 2014 for health, charitable, compliance and special entity items. Adjustments for the first two items that follow are based on the medical care component of the CPI.

Long-term care premiums. Amounts paid for insurance that covers qualified long-term care services are treated as medical expenses up to specified dollar limits that vary with the age of the taxpayer as of the close of the tax year. For a taxpayer age 40 or younger, the 2014 limit will be $370 (up from $360 for 2013); more than 40 but not more than 50, $700 (up from $680 for 2013); more than 50 but not more than 60, $1,400 (up from $1,360 for 2013); more than 60 but not more than 70, $3,720 (up from $3,640 for 2013); and more than 70, $4,660 (up from $4,550 for 2013).

Payments received under qualified long-term care insurance. Amounts received under a qualified long-term care insurance contract are generally excludable as amounts received for personal injuries and sickness, subject to a per diem limitation, which will be $330 in 2014 (up from $320 for 2013).

Archer MSAs. For Archer medical savings account (MSA) purposes, in 2014, a “high deductible health plan” will be a health plan-

with an annual deductible of at least $2,200 and not more than $3,250 (up from $2,150 and $3,200 for 2013), in the case of self-only coverage; and
with an annual deductible of at least $4,350 and not more than $6,550 (up from $4,300 and $6,450 for 2013), in the case of family coverage; and
under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits doesn’t exceed-
… $4,350 (up from $4,300 for 2013) for self-only coverage, and
… $8,000 (up from $7,850 for 2013) for family coverage.
Insubstantial benefit charitable contribution limitation. Certain de minimis benefits provided by a charity to a donor don’t affect the donor’s charitable contribution deductions. Under these rules, charitable contributions will be fully deductible in 2014 if (1) the donor makes a minimum payment of $52.00 ($51.00 for 2013) and receives certain benefits with a cost of not more than $10.40 ($10.20 for 2013) or (2) the charity mails or otherwise distributes free unordered “low-cost articles” with a cost of not more than $10.40 ($10.20 for 2013). In addition, charitable contributions will be fully deductible if the benefit received by the donor isn’t more than the lesser of $104 (up from $102 for 2013) or 2% of the amount of the contribution.

Dues paid to agricultural or horticultural organizations. Annual dues not exceeding $158 for 2014 (up from $155 for 2013) for membership in an agricultural or horticultural organization won’t be unrelated business income despite any benefits or privileges to which members of the organization will be entitled.

Reporting exemption for exempt organizations with lobbying expenditures. For 2014, social welfare, agricultural and horticultural organizations are exempt from the requirement that they report to their members the portion of their dues allocable to lobbying if 90% or more of their annual dues are received from persons, families, or entities who pay dues of $110 or less (up from $108 for 2013).

Maximum hourly fee for attorneys under Code Sec. 7430(c)(1). The maximum hourly amount allowed for attorney’s fees to a prevailing party under Code Sec. 7430(c)(1) will be $190 an hour for fees incurred in 2014 (same as for 2013).

Mechanics’ lien priority over tax liens. The holder of a lien for $7,470 or less for the repair or improvement of a personal residence will have priority over notices of tax liens filed in 2014. This is up from $7,350 for 2013.

Sales price priority over tax liens. A nondealer purchaser of household goods, personal effects, etc. will be protected against a tax lien filed in 2014 if the sales price is not over $1,490 (up from $1,470 for 2013).

Property exempt from levy. The value of property exempt from levy under Code Sec. 6334(a)(2) (fuel, provisions, furniture, and other household personal effects, as well as arms for personal use, livestock, and poultry) may not exceed $8,940 for levies in 2014 (up from $8,790 for 2013). The value of property exempt from levy under Code Sec. 6334(a)(3) (books and tools necessary for the trade, business, or profession of the taxpayer) may not exceed $4,470 for levies issued in 2014 (up from $4,400 for 2013).

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