(2)_Why You Need Us for Filing Out FAFSA

FAFSA or Free Application for Federal Student Aid, is a tedious and mind-numbing application that must be filled out in order to get a chance at financial aid for college.

We get phone calls and e-mails when folks hit question 85.  Well, let me take that back. Most folks can answer question 85, it is everything AFTER that where things get a bit murky (and the despair sets in).  For good reason, these questions read like the tax code:

Questions 88 and 89 ask about earnings... this information may be on the w-2 forms, or on IRS form 1040- lines 7+12+18+Box 14 (Code A) of IRS schedule K-1 (Form 1065); on 1040A-line7; or 1040EZ-line 1

I took that verbatim from a FAFSA application I printed off the internet.  We are not saying a normal person can't fill this out, we are just saying the government didn't make this thing very "intuitive". When it comes to filling out a federal application that will affect your child's future, we just want to be sure.  No one wants to be accused of submitting fraudulent information.

That being said, here are a few things we'd like to offer to help you get through this process as fast as humanly possible.

1. Deadlines, deadlines, deadlines
First things first, this thing is due June 30 at the end of each academic year. For example, the deadline to submit your FAFSA application for the 2014-15 school year would be June 30th, 2015.

  But, funds are on a first-come, first-serve basis so you want to request assistance as soon as you can after the first of the year.  **You can submit your FAFSA using estimated tax information, but you must correct it right after you file your return.

**Make sure to click on the "State Aid Deadlines" link at FAFSA website for information on the deadlines in your state.

2. IRS Data Retrieval Tool
Do not reinvent the wheel, especially if you don't have to.  Use this (if you don't fall into one of the five exceptions below).  This is the easiest way to complete or correct your FAFSA with accurate tax information.  You can view and transfer your tax info directly into the FAFSA!

Here are some cases where you will not be able to use this feature: 

1. Students or parents who are married and file as Married Filing Separately
2. Students or parents who are married and file as Head of Household
3. Students or parents filed an amended tax return
4. Students or parents filed a foreign tax return
5. Students or parents filed their tax returns electronically within the last 3 weeks or through the mail withing the last 11 weeks.

3. Who is My "Parent"/ Marital Status of Parents
Don't chuckle, this one trips a lot of folks up.  Read the remainder of Item 3 as if you were the applying student.

Parent, according to FAFSA, is your legal (biological and/or adoptive) parent or stepparent.

• If your parents are divorced or separated and DON'T live together, answer the questions about the parent with whom YOU LIVED MOST during the past 12 months.
• If you lived the same amount of time with each parent, give answers about the parent who provided MORE FINANCIAL SUPPORT during the past 12 months. (In a situation where the parents split all costs it will generally default to the parent with the greater income).
• If you have a stepparent who is married to the legal parent whose information you're reporting, you must provide that stepparent's information.  (If your father and step-mother are the ones on the return, they are your "parents" for this application)
• FAFSA asks about "Your Parents'" information. Again, since you are using ONE tax return, you will use the people on the tax return as your "Parents". 
• The only exception to the above is when FAFSA asks about your parents' education level. For this question your parents are considered your birth parents or adoptive parents. 

4. What you need
They say that as long as you have your tax return you can answer these questions... sort of, but not really.  

You should also have at the ready:

1. All Forms W-2 used on the tax return. 
2. Current cash on hand, and balances in all savings and checking accounts.  
3. Your total investments, including real estate... but don't include the home you live in.  
4. The net worth of your business(es). 
5. A total of all child support paid AND/OR received because of legal requirement.

5. Tips when answering questions 85-94 on FAFSA

• #85 is your AGI.  Line 37 on Form 1040.  
• #86 Enter your parents' income tax.  Line 55 on Form 1040  
• #87 Enter your parents' exemptions. Line 6d on Form 1040
• #88 How much did Parent 1 & Parent 2 earn.  This is where they throw you for a loop.  They want to know how much EACH parent earned.  
• Not each biological parent.  
• Not just the one parent who shares DNA with the applying student.  
• They want the amount earned by the 2 individuals on the tax return you are using.  There is no "line" for this separated wage information on a joint tax return. The best thing to do here is to use the wage information from the parent's/parents' W-2. 
• #90 Add up the current balance of cash, savings and checking accounts.
• #91 Net worth of your parents' investments, including real estate... but not the house you live in.  (NET WORTH= CURRENT VALUE less DEBT. If you net worth is negative, enter 0.)
• Investments include- (*Investment value = current balance or market value of these investments as of today.  Investment debt means only those debts that are related to the investments.)
• Real estate - raw land
• Rental property
• Trust funds
• UGMA & UTMA accounts
• Money Market, Mutual Funds, Certificates of Deposit, Stock, Stock Options, Bonds, Other Securities
• Installment and land sale contracts (including mortgages held)
• Commodities
• Qualified educations benefits or education savings accounts
• For a student who must report parental information, the accounts are reported as parental investments in #91, INCLUDING all accounts owned by the student and all accounts owned by the parents for any member of the household
• Investments DON'T INCLUDE:
• The house you live in
• The value of life insurance
• The value or retirement plans (401K, pensions, annuities, non-education IRA, Keogh)
• Cash, savings and checking accounts.
• UGMA & UTMA accounts for which you are the custodian, but not the owner.
• #92 Net worth of your parents' current business/investment farms. DON'T INCLUDE a family farm or family business with 100 or fewer full-time employees (So, this applies to virtually no one.) 
• #93 Parents' additional financial information... some of which is on the tax return.
• a. Education credits-- Line 49, Form 1040
• b. Child Support paid 
• c. Parents' need-based employment portions of fellowships
• d. Parents' taxable student grant & scholarship aid
• e. Combat or Special Combat pay
• f. Earnings from work under a cooperative education program offered by a college
• #94 Parents' Nontaxable Items (everything else...)
• a. Payments to tax-deferred pension and retirement savings plans (on W-2)
• b. IRA deductions & payments to self-employed SEP, SIMPLE, Keogh & other IRS qualified plans.  Line 28+Line 32, Form 1040
• c. Child Support Received (don't include foster or adoption payments)
• d. Tax Exempt Interest.  Line 8b, Form 1040
• e. Nontaxable portion of IRA distributions. Line 15a- Line 15b, Form 1040
• f.  Nontaxable portions of pensions. Line 16a- Line 16b, Form 1040
• g. Housing, food, and other living allowances paid to members of military, clergy, others
• h. Veterans' non-education benefits, such as Disability, Death Pension, and/or VA Education Work-Study allowances
• i. Other nontaxable income not reported like Worker's Comp, Disability, HSA deductions

If all this makes you want to cry, just give us a call... we can help.

(1)_Financial Aid Starts With FAFSA

College-bound students and their families have more work to complete beyond submitting applications and (hopefully) deciding which school to attend. Students should file the Free Application for Federal Student Aid (FAFSA) before starting college and in succeeding years. As the cost of higher education soars, filing the FAFSA may provide some valuable relief.

Why it’s important

Using the FAFSA to apply for aid opens the door to various forms of assistance, including need-based grants, merit-based scholarships, education loans, and work opportunities. Funds may come from federal or state governments or from individual colleges.

Essentially, aid applicants use the FAFSA to report the student’s assets, student’s income, parents’ assets, and parents’ income. These data are placed into a formula to determine the expected family contribution (EFC) for the coming academic year. If the cost of attending a given college exceeds the EFC, the student may be offered some form of financial aid.

Example 1: 
Arlene Walker fills out the FAFSA, which determines that her EFC for the coming school year is $22,000. If Arlene will be attending a college where the published total cost is $36,000, she might receive a $14,000 aid package to fill the gap.

Some parents may choose not to have their youngsters file the FAFSA, either because they doubt they’ll receive need-based aid or because they don’t want to deprive more deserving applicants of limited aid dollars. That’s for each family to decide, but not filing the FAFSA may have repercussions. Some merit scholarships require the FAFSA, as do federal education loans. What’s more, some colleges are so expensive that relatively affluent parents can qualify for aid, especially if more than one child will be attending college.

A matter of time

Filling out the FAFSA presents some challenges. The forms can be filled out as early as January for the following school year. Indeed, some observers recommend filing as early as possible because late filers may be competing for a depleted pool of funds. Some universities have early deadlines for submitting the FAFSA. However, families filing in January may not yet have all the relevant information, such as adjusted gross income (AGI) for the previous calendar year.

            
Example 2:
Brad Taylor is a high school senior in 2014–15 who will start college in August 2015. In January 2015, Brad fills out the FAFSA with help from his parents. They include their best estimates for 2014 financial information, including AGI. In March 2015, after the Taylors’ tax returns for 2014 are completed, they update the data on the FAFSA that was previously submitted.

Going forward, the Taylors keep submitting a new FAFSA every year, until Brad no longer will be in undergraduate or graduate school.

Application assistance

You and your student can fill out the FAFSA online at www.fafsa.ed.gov. Some colleges require still other financial aid forms, and the entire process can be time-consuming. Our office can help college students and their families to organize the required documents and submit the necessary tax related information on time. We would also be happy to help you fill in the tax-related information on the FAFSA.  We can provide a quick e-mail with our pricing at your request.

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S Corp or LLC?

Many business owners structure their companies as S corporations or limited liability companies (LLCs). On the surface there are several similarities. Both types of entities avoid corporate income tax. Instead, business income is taxed only once, on the tax return of the S corporation shareholder or the LLC member. Moreover, both S corporation shareholders and LLC members have limited liability: their financial exposure from the company’s operation generally is no greater than the amount they invest and any notes they personally sign. (In exceptional circumstances, creditors may gain access to additional personal assets of the business owner.)

            Nevertheless, there are differences between the two structures, which you should consider when choosing between them.

Looking into LLCs

In some ways, an LLC resembles a sole proprietorship or a partnership, but with the advantage of limited liability. Usually, you can form an LLC with relatively little paperwork. Once an LLC is operating, there may be few tax returns to file and other recordkeeping and reporting requirements for LLCs are generally less burdensome than for corporations. If an LLC has multiple members, the business has a great deal of flexibility in how any profits are distributed among them.

            A downside is that an LLC may have a limited life. Depending on state law and the operating agreement, the death of a member may dissolve the LLC, for instance. In addition, taxes might be relatively high for LLC members. That’s because all net income of the LLC is passed through to members as earned income on their personal tax returns, per the LLC agreement. The members are treated as if they were self-employed; they owe the employer and employee shares of items such as Social Security and Medicare tax, with a relatively small deduction as an offset.

Considering S Corps

Even after making an election to be taxed under Subchapter S of the Internal Revenue Code, an S corporation is still a corporation. There are meetings that must be held, minutes that must be kept, and extensive paperwork to process. Such efforts can be time consuming and expensive.

            In addition, S corporations must meet certain requirements. A business with more than one class of stock or a shareholder who is not a U.S. citizen or resident can’t be an S corporation, for example. Similarly, an S corporation can’t make disproportionate distributions of dividends or losses.

            On the plus side, S corporation shareholders can receive a salary, on which they owe payroll tax, and dividends, on which they don’t. Although artificially low-balling a salary will draw the ire of the IRS, S corporation owners may pay thousands of dollars less per year in payroll taxes than LLC members pay on similar company related income. What’s more, S corporations can be long-lived, and this permanent nature may make them more attractive to lenders and investors than potentially short-lived LLCs.

Choosing or combining

Your choice of business structure may come down to whether you prefer the simplicity and flexibility of an LLC or the potential tax savings and lender and investor appeal of an S corporation. State laws vary, so a tilt in one direction or another may influence your decision.

Yet another possibility is to set up your business as an LLC and then request S corporation taxation by filing IRS Form 2553, “Election By A Small Business Corporation.” Our office can go over your specific circumstances to help you decide how to structure your company.

Inherited IRAs and Bankruptcy?

Under federal law (and under the laws of most states), retirement plans such as IRAs enjoy some protection in bankruptcy proceedings. Does that same protection apply to inherited IRAs? The issue has been disputed in many court cases in recent years with mixed verdicts. Finally, in June 2014, the U.S. Supreme Court unanimously decided that bankruptcy creditors may have access to these accounts (Clark v. Rameker, No. 13–299 (U.S. 6/12/14)).

This ruling has implications for IRA owners as well as for the beneficiaries of such accounts.

           

In this case, Ruth Heffron held over $450,000 in her IRA. If Ruth had declared bankruptcy, she probably could have kept certain IRA assets. “Allowing debtors to protect funds in traditional and Roth IRAs ensures that debtors will be able to meet their basic needs during their retirement years,” the Supreme Court noted. Keeping some assets from bankruptcy creditors helps debtors “obtain a fresh start,” reducing the chance that these debtors will be “left destitute and a public charge.”

Beneficiary battle

Many IRAs still hold assets when the owner dies. Then, the IRA may pass to the designated beneficiary.

            

Here, after Ruth died, her daughter Heidi Heffron-Clark inherited the account. Nine years later, Heidi and her husband filed for bankruptcy. The couple asserted that the funds in Heidi’s inherited IRA, which now amounted to almost $300,000, should be exempt from creditors’ claims.

            

In such cases, debtors have prevailed some of the time. Retirement funds held in tax-exempt retirement accounts are protected in bankruptcy, some courts have ruled, and the funds in an Individual Retirement Account remain retirement funds even after they pass to a beneficiary and are held in an inherited IRA.

            

Other courts, including the one ruling on Heidi’s case, found that funds in an inherited IRA are no longer retirement funds because the funds are not specifically set aside for use by the beneficiary in retirement. Thus, they are not protected in bankruptcy. Heidi and her husband appealed to the Supreme Court, which upheld the ruling against them.

            

In favoring the creditors in this case, the Supreme Court gave several reasons why funds held in an inherited IRA are not funds set aside for retirement purposes. First, a beneficiary can’t contribute to an inherited IRA. An individual can put money into a Roth or traditional IRA via annual contributions or direct transfers or rollovers from other retirement accounts. Indeed, various tax incentives encourage such contributions.

            

As its second reason, the Court noted that beneficiaries are required to take minimum distributions from inherited IRAs, even if they are many years from retirement. Traditional IRA owners face required distributions only after age 70½, when they are likely to be retired, and Roth IRA owners never have to withdraw funds. Finally, the Court noted that “the holder of an inherited IRA may withdraw the entire balance of the account at any time—and use it for any purpose—without penalty.” Traditional and Roth IRA owners, on the other hand, generally are subject to penalties for early withdrawals before age 59½.

Points to consider

After this decision, people who declare bankruptcy can’t expect to protect inherited IRAs from creditors. Therefore, IRA owners should review their choice of IRA beneficiaries. If a future bankruptcy filing by a beneficiary is a concern, you might designate an irrevocable trust as the beneficiary of your IRA and name your human heir as the trust beneficiary. Such a procedure may increase the chance that the IRA will enjoy protection in bankruptcy.

           

Moreover, surviving spouses who inherit an IRA from the other spouse might be affected by this decision. A spousal beneficiary “may roll over the IRA funds into his or her own IRA, or he or she may keep the IRA as an inherited IRA,” the Supreme Court observed. Once the IRA has been rolled over into the surviving spouse’s own IRA, it probably will be protected in bankruptcy.

            

Still, some spousal beneficiaries choose to keep the account as an inherited IRA. That’s often the case if the survivor intends to take withdrawals before age 59½ and wants to avoid a 10% early withdrawal penalty. The Supreme Court’s decision does not indicate whether an inherited IRA held by a surviving spouse would get bankruptcy protection, but all of the reasons cited to disallow such protections—no future contributions, required minimum distributions at any age, no penalties for early distributions—apply to inherited IRAs held by a surviving spouse. Therefore, any widow or widower who is considering leaving a deceased spouse’s IRA as an inherited IRA might discuss creditor protection issues with a knowledgeable attorney.

            

Finally, you should keep in mind that the Supreme Court’s decision applies to bankruptcy cases, not other types of creditors’ claims. In non-bankruptcy litigation, state law usually will determine whether inherited IRAs are protected from creditors. Some states specifically protect inherited IRAs, but most states have not passed relevant legislation. Again, you should consult with counsel if this is a concern. 

Deducting Foreign Business Travel

As the world shrinks, business owners may find themselves traveling to foreign destinations. Often, such trips are vital, leading to personal visits with suppliers and potential customers. Ideally, you’ll be able to deduct all your travel costs, but that may not be the case if you venture beyond the 50 states and Washington, D.C.

The seven-day rule

If you travel outside the U.S. for a week or less, your trip will be considered entirely for business, even if you combine business and non-business activities. Then, you can deduct all of your travel costs. A week, for this purpose, is seven consecutive days, not counting the day you leave the U.S.

            

Example 1: Denise Edwards has a clothing import business in Chicago. She travels to San Francisco on Tuesday, then flies to Hong Kong on Wednesday. After spending Thursday and Friday in business discussions, Denise spends Saturday through Tuesday sightseeing. She flies back to San Francisco on Wednesday and returns to Chicago on Thursday.

            

Here, Denise was not outside the U.S. for more than a week. (The day she departed from San Francisco does not count as a day outside the   U. S.) Therefore, she can deduct all of her travel costs. She also can deduct the cost of her stay in Hong Kong for the days she worked there but not her costs for her sightseeing days.

More than one week

Business trips longer than one week trigger another set of rules. As long as 75% or more of the trip’s total days are business days, you can deduct all your travel costs. Days traveling to and from your destination count as business days, for the purpose of reaching the 75% mark. Again, your costs for non-business days are not tax deductible.

            

If your trip is primarily for business, but you fail both the one week and the 75% tests for the travel, calculating your deduction becomes more complicated. 
You can only deduct the business portion of your cost of getting to and from your destination and must allocate your travel time on a day-to-day basis between business days and non-business days.

            

Example 2: Henry Jackson owns a restaurant supply business in Boston. He flies to Berlin on March 7 for a conference and spends time there on business until March 17. That day, Henry flies to Brussels to see friends and tour the local museums. On March 24, he returns to Boston from Brussels.

            

As the IRS looks at Henry’s itinerary, it appears that Henry could have returned to Boston on March 17, after completing his business. Thus, 11 days of the trip (March 7–17) count as business days while the other seven days (March 18–24) are non-business days.

            

With this reasoning, 7 out of 18 days of the trip were non-business days, so ⁷/₁₈ of what it would have cost him to travel round-trip between Boston and Brussels is not tax deductible.

Assume Henry’s total airfare costs were $2,000, whereas roun-dtrip airfare between Boston and Brussels would have been $1,500. Henry must subtract ⁷/₁₈ of this round-trip fare ($1,500 x ⁷/₁₈ = $583) from his actual travel expenses. 
Because Henry spent $2,000, subtracting $583 gives him a $1,417 deduction for his airfare. He can deduct his costs while in Berlin on business but not his costs while in Brussels for other purposes.

As you can see, calculating foreign business travel deductions can be complex. If you will be outside the United States for business, our office can help you set up a schedule for optimal tax benefits. 

Tougher Rules on Reverse Mortgages

The Federal Housing Administration (FHA) has imposed more stringent requirements on reverse mortgages, making them increasingly difficult to obtain. For qualified borrowers, though, continued low rates and the spread of so-called “purchase loans” can make it worthwhile to consider this type of debt.

Income instead of outflow

As the name suggests, a reverse mortgage is the opposite of a traditional home loan. With a reverse mortgage, you get cash instead of making payments to the lender. You can get a lump sum, a line of credit, or regular monthly income. The amount you borrow will be secured by your home, so reverse mortgages are for homeowners with little or no debt on their home. Most reverse mortgages are Home Equity Conversion Mortgages (HECMs), which are offered by private lenders and insured by the FHA; borrowers must be at least age 62.

            
The amount you’ll receive will be determined by current interest rates, your age, and your home equity. Interest rates are relatively low now (around 5% for a fixed-rate loan and under 3% for a loan with a variable rate that adjusts monthly), but you’ll pay an added 1.25% of the balance for mortgage insurance. The older you are and the greater your home equity, the more you’ll be able to borrow on a reverse mortgage.

            
Many reverse mortgage calculators can be found online. Near mid-year 2014, the calculator at reversemortgage.org was asked what a married couple in Indianapolis, both aged 68, could borrow against a $320,000 debt-free home. 

• A fixed-rate loan would permit an upfront payout of over $97,000, whereas a variable-rate loan would provide $971 in monthly cash flow. 
• If that couple were both age 78, the numbers would be about $106,000 upfront and $1,236 a month, respectively. In any case, no tax would be due on the borrowed funds. 

With a HECM, an owner occupant doesn’t have to make any debt repayment while still living in the home. No matter how large the loan balance becomes, the outstanding loan balance won’t be due until the borrower dies, sells the home, or is no longer using the home as a primary residence. 
Naturally, the loan balance will keep mounting: that $97,000 or $106,000 loan against a $320,000 house will approximately double in 11 years, at today’s fixed interest rates.

Higher hurdles

A reverse mortgage borrower still owns the home, which means continuing to have ownership responsibility.

 Example 1: 
Frank and Robin Grant receive a reverse mortgage that will pay them $1,000 a month. They still own their home, so they still must pay homeowners insurance premiums, local property taxes, and association dues.

             
 Under new FHA rules, reverse mortgage applicants must undergo a financial assessment in order to qualify for a loan. Lenders have to check to see that borrowers can afford to pay the required taxes and insurance bills, based on their assets and cash flow. Borrowers with questionable resources may be asked to put money into escrow or may have their application rejected.

Borrowing to buy

Reverse mortgages are aimed at seniors who wish to stay in their home as they grow older. In effect, they can use their home equity for added cash in retirement so they won’t have to move into an unfamiliar place, perhaps one that’s away from friends and family.

That’s not the case for all seniors. Some want to buy a different home that’s easier to maintain or move to a less expensive region.

 Example 2: 

Helen Parker is a widow living in a large house. She wants to buy a place in a seniors’ community, but she lacks the income to qualify for a traditional mortgage, and she is having a difficult time selling the house where she now lives.

            
Fortunately, Helen has enough assets to qualify for a reverse mortgage purchase loan, which will enable her to buy into the seniors’ community now. Helen still plans to sell her old home, but she can move right away and not have to make payments on the reverse mortgage purchase loan.

            
Reverse mortgages can be complicated, and they require various fees, but they may offer a practical way to tap home equity in specific circumstances. 

Delayed Deduction

[] Because reverse mortgages are considered loan advances and not income, the amount you receive is not taxable.

[] Any interest accrued on a reverse mortgage is not deductible until the interest is actually paid, which is usually when the loan is paid off in full. Such a payment might be made by the borrower, by an heir, or by the borrower’s estate.

[] For the party repaying the loan, the deduction may be limited because a reverse mortgage loan generally is subject to the limit on home equity debt. That limit caps deductions to the interest on $100,000 of debt.

Equipment Expensing & Bonus Depreciation

As of this this writing, the status of equipment expensing for 2014 is unclear. The same is true for bonus depreciation. The ongoing uncertainty on these issues may have an impact on your year-end plans to acquire business equipment.

           

Section 179 of the tax code allows certain types of equipment to be expensed: the purchase price is fully tax deductible when the item is placed in service, rather than deducted over a multi-year depreciation schedule. New and used equipment qualify for this tax benefit, with some exceptions (such as real estate).

            

In recent years, Congress has consistently expanded the reach of Section 179. By 2013, up to $500,000 of purchases of equipment eligible for the deduction could be expensed; a business could buy up to $2 million worth of eligible equipment that year before losing any of this benefit.

           

Example 1:
In 2013, DEF Corp. bought $2,085,000 of business equipment eligible for the Section 179 expense deduction and elected to not take bonus depreciation on the equipment. This was $85,000 over the Section 179 limit, so DEF could deduct only $415,000 (the $500,000 ceiling minus $85,000) as an expense in 2013 under Section 179. DEF must recover the other $1,670,000 of the costs of its 2013 purchases through depreciation methods.

            

The $500,000 and $2 million limits for Section 179 expired after 2013. Under current law, the 2014 limit for expensing is $25,000 worth of purchases (plus an inflation adjustment) with a phaseout beginning at $200,000 worth of purchases.

            

Similarly, bonus depreciation was available for new equipment until expiration after 2013. This provision allowed a 50% depreciation deduction on purchases of new equipment, before using an extended schedule to depreciate the balance. Currently, bonus depreciation is not permitted in 2014.

Dealing with doubts

Both houses of Congress have indicated interest in restoring an expanded Section 179 deduction as well as bonus depreciation for 2014. However, any updates probably won’t be announced until late in the year. If that’s the case, how should business owners and self-employed individuals proceed?

           

Start by acquiring any equipment that your company truly needs for current and future profitability. If your business needs the item now, buy it now, and deduct the cost as the tax law permits.

           

If the timing isn’t urgent, consider limiting purchases to those that will bring 2014 acquisitions up to $25,000, which will be the Section 179 ceiling if no extension is passed. Contact our office in late November or early December for an update on relevant legislation.

            

Keep in mind that equipment must be placed in service by the end of 2014 to qualify for depreciation deductions (if reinstated) or expensing this year, so merely paying for equipment in 2014 does not entitle you to a deduction. However, this also means that you can get the 2014 tax benefits for equipment placed in service in 2014 even if you defer payment for the equipment until 2015.