We have all heard about the tax increases scheduled to take affect over the next few years as a result of President Obama’s health care legislation, but you might be surprised to learn that Congress passed a series of tax cuts earlier last month. According to this article from the Wall Street Journal, the House of Representatives passed a series of tax law changes that will affect employer-provided cell phones, the gift-tax exclusion, and employee rewards. I have included a snippet of the WSJ article explaining these modifications to the tax code below, but be sure to check out the full article here.
The "Masters exemption"
Homeowners who rent out their property for 14 or fewer days a year may pocket the income tax-free. This break has given homeowners near the Augusta National Golf club a sweet deal on income over the years, in some cases up to $20,000, from short-term rentals during the Masters tournament each April.
The property doesn't have to be a first home, but the exemption can be taken only once a year, says CPA Douglas Stives of Monmouth University. It can be taken on more than one property, according to the IRS.
Employers can make awards to workers valued as much as $400 a year for good attendance, safe driving, years of service and so on. The criteria must be objective and fair, but the awards aren't taxable to the employee and are fully deductible by the employer.
Gift-tax exclusionOne of the best estate-planning options remains the $13,000 annual gift-tax exclusion. Anyone may give anyone else up to that amount per year in cash or property, free of gift tax. One partner of a married couple can double the gift and the exemption. So a couple with three married children and six grandchildren could give away over $300,000 a year, tax-free.