What to expect in 2015.

Some upcoming changes for 2015.

  • Sadly, slower tax refunds are guaranteed. The head of the IRS recently confirmed: Measures the agency is taking to combat identity theft mean it will take longer to issue refunds to filers.
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  • The tax rateof 39.6 percent affects singles whose income exceeds $413,200($464,850 for married taxpayers filing joint returns), up from $400,000 and $450,000 respectively. The other marginal rates-10,15, 25, 28, 33, and 35 percent are inforced.
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  • Many key dollar limits on retirement plans are a littlt higher in 2015. The maximum 401(k) contribution rises to $18,000, up $500 from 2014. Individuals who were born before 1966 are allowed to put in as much as $24,000. These payin limits apply to 403(b) and 457 plans as well. The ceiling on SIMPLEs increases to $12,500...$15,500 for individuals who are age 50 or older in 2015. Retirement plan contributions can be based on up to $265,000 of salary. The payin limitation for defined contribution plans increase to $53,000. Anyone making over $120,000 is highly paid for plan discrimination testing.
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  • The estate and gift tax exemption for 2015 jumps to $5,430,000. The rate remains 40%. The gift tax exclusion stays the same...$14,000 per donee. Up to $1,100,000 of farm or business realty can receive discount tax valuation.
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  • Some of the standard deductions for 2015 will increase by small amounts. Married couples can claim $12,600. If one spouse is age 65 or older...$13,850. If both are...$15,100. Singles can claim $6,300...$7,850 if they are 65 years or older. Household heads get $9,250 plus $1,550 once they reach age 65. Blind people receive $1,250 more ($1,550 if unmarried and not a surviving spouse).
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  • Personal exemptions increase to $4,000 in 2015 ($3,950 in 2014) for filers and their dependents. However, this tax break is phased out for upper-incomers. It is trimmed by 2% for each $2,500 of AGI over the same thresholds for the itemized deduction phaseout.
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  • The maximum earned income tax credit (EITC) for low- and moderate- income workers and working families rises to $6,420 (up from $6,143 in 2014). The maximum income limit for the EITC rises to $54,567 married with 3 or more children (up from $51,563 in 2014). The credit varies by family size, filing status, and other factors with the maximum credit going to joint filers with three or more qualifying children. Investment income must be $3,350 or less for the year or EITC is lost.
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  • The standard mileage allowances for 2015 are as follows:  For business driving the rate is $0.57.5 per mile; for medical travel and moving the rate is $0.23 per mile; and for charitable driving the rate is $0.14. Expensing is slashed. Only $25,000 of assets qualify, down from $500,000, and the $25,000 phases out once more than $200,000 of assets are put in service.
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  • For qualified transportation benefits exclusions, the caps on transit passes and commuter vans  fall sharply once again, to $130 a month. In late 2014, Congress reinstated the $250 cap, but only for 2014. The monthly limitation on employer-provided tax-free parking remains $250.
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  • U.S. taxpayers working abroad in 2015 have an exclusion of $100,800.
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  • Estates of decedents who die during 2015 have a basic exclusion amount of $5,430,000, up from a total of $5,340,000 for estates of decedents who died in 2014.
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  • The annual exclusion for gifts remain at $14,000 for 2015.
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  • KIDDIE TAX: The kiddie tax has a little less bite. The first $1,050 of unearned income of a dependent who doesn't work is tax-free, a $50 hike. The next $1,050 is taxed at 10%, and any unearned income over $2,100 is taxed at the parents rate.
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  • ADOPTION: The adoption credit can be taken on up to $13,400 of cost, a $210 boost. If the credit is more than a filers tax liability, the excess is not refundable. The full $13,400 credit is available for a special needs adoption, even if it cost less. The credit starts to dry up with AGIs over $201,000 and ends at $241,010. The exclusion for company-paid adoption aid also increases to $13,400.
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  • LONG TERM CARE: The limits on on deducting long-term-care premiums are a bit higher. Taxpayers who are age 71 or older can write off as much as $4,750 per person. Filers age 61 to 70...$3,800. Those who are 51 to 60 can deduct up to $1,430. Individuals age 41 to 50 can take $710. And people age 40 and younger...$380. 
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  • HEALTH REFORM LAW: The high court will tackle the issue of whether health premium tax credits are limited to those who buy coverage on a state-run exchange. A decision against the government, would nix credits to buyers of insurance on exchanges run by the feds. In addition, it would weaken the employer mandate because an enployer's liability for the fine is tied to its employees receiving a credit for insurance bought on an exchange.
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  • AMERICAN TAX RELIEF ACT OF 2012: extended the relief for married taxpayers, the expanded credit for taxpayers with three or more qualifying children and other provisions to DECEMBER 31,2017.
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  • DIRECT DEPOSIT LIMITS: In an effort to combat FRAUD and identity theft, new IRS procedures effective January 2015 will limit the number of refunds electrinically deposited into a single financial account or pre-paid debit card to three. The fourth and subsequent refunds automatically will convert to a paper refund check and be mailed to the taxpayer.

 

 

 

 

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