1. Key Facts to Know for 2014
All of us at Phillips Financial wish you a Happy and Prosperous New Year.
Some or all of the items summarized below may be of interest to you in your preparations for 2014.
Net Investment Income Tax
A new Net Investment Income Tax went into effect on Jan. 1, 2013. The 3.8 percent Net Investment Income Tax applies
to individuals, estates and trusts that have certain investment income above certain threshold amounts. On Nov. 26,
2013, the IRS and the Treasury Department issued final regulations which provide guidance on the general application of
the Net Investment Income Tax and the computation of Net Investment Income. In addition, on Nov. 26, 2013, the IRS
and the Treasury Department issued proposed regulations on the computation of net investment income as it relates to
certain specific types of property. Comments may be submitted electronically, by mail or hand delivered to the IRS. For
additional information on the Net Investment Income Tax, please refer to the IRS questions and answers For additional
details or consult:
http://www.irs.gov/uac/Affordable-Care-Act-Tax-Provisions
Changes to Itemized Deduction for Medical Expenses
Beginning Jan. 1, 2013, you can claim deductions for medical expenses not covered by your health insurance when they
reach 10 percent of your adjusted gross income. This change affects your 2013 tax return that you will file in 2014. There
is a temporary exemption from Jan. 1, 2013, to Dec. 31, 2016, for individuals age 65 and older and their spouses. For
additional information, see the questions and answers as provided by the IRS.
Additional Medicare Tax
A new Additional Medicare Tax went into effect on Jan. 1, 2013. The 0.9 percent Additional Medicare Tax applies to an
individual’s wages, Railroad Retirement Tax Act compensation and self-employment income that exceeds a threshold
amount based on the individual’s filing status. The threshold amounts are $250,000 for married taxpayers who file
jointly, $125,000 for married taxpayers who file separately and $200,000 for all other taxpayers. An employer is
responsible for withholding the Additional Medicare Tax from wages or compensation it pays to an employee in excess
of $200,000 in a calendar year. On Nov. 26, 2013, the IRS and the Department of the Treasury issued final regulations
which provide guidance for employers and individuals relating to the implementation of Additional Medicare Tax,
including the requirement to withhold Additional Medicare Tax on certain wages and compensation, the requirement to
report Additional Medicare Tax, and the employer process for adjusting underpayments and overpayments of Additional
Medicare Tax. In addition, the regulations provide guidance on the employer and individual processes for filing a claim
1920 Tienda Drive, Suite 202, Lodi, CA 95242 (209) 367-0868 Phone (855)367-0868 Toll Free (209) 367-0811 Fax www.lpl.advisorweb.com/phillipsfinancialWeb
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Christian Phillips, LPL Registered Principal, CA Insurance Lic. # 0A20651 • David Phillips, LPL Registered Principal, CA Insurance Lic.# 0C98523
Securities offered through LPL Financial Member FINRA/SIPC

2. for refund for an overpayment of Additional Medicare Tax. For additional information on the Additional Medicare Tax,
refer to the IRS questions and answers.
Long-Term Care Tax Advantages
Under current tax laws, you may be able to deduct a portion of the premium you pay for a tax-qualified long-term care
insurance policy. Each year, the federal government sets limits for eligible premium – the amount that may be
deducted. The eligible premium amount may be claimed as a medical expense as long as your combined medical
expenses exceed 10 percent of your adjusted gross income and you itemize deductions on your federal income-tax
return (7.5 percent for those 65 and over through 2016). Source: IRS Revenue Procedure 2013-35
Eligible Premium Guidelines for 2014
At age:
You can
deduct:
40&younger
$370
41-50
$700
51-60
$1,400
61-70
$3,720
71 & older
$4,660
Long-term care insurance policy benefits are intended to be tax-free as long as they do not exceed the greater of your
qualified long-term care daily expenses or the per-day limitation, which is $330 in 2014. If you pay long-term care
expenses out of your own pocket (i.e., home care services, nursing home care, etc.), you generally may claim these
expenses as a medical deduction on your income tax return. The only exception is payment for home care provided by a
family member. These expenses are not deductible unless the family member is a licensed health-care professional.
The information provided above is NOT intended to be tax advice. Consult your tax advisor to determine the tax
benefits for your situation.
Next month we’ll follow up with a few more items of interest.
HAPPY NEW YEAR
1920 Tienda Drive, Suite 202, Lodi, CA 95242 (209) 367-0868 Phone (855)367-0868 Toll Free (209) 367-0811 Fax www.lpl.advisorweb.com/phillipsfinancialWeb
www.linkedin.com/in/phillipschristian, www.facebook.com/christian.phillips
Christian Phillips, LPL Registered Principal, CA Insurance Lic. # 0A20651 • David Phillips, LPL Registered Principal, CA Insurance Lic.# 0C98523
Securities offered through LPL Financial Member FINRA/SIPC