January 16, 2015
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Prepare now for 2015 federal tax changes and review annual inflation adjustments
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This is the time of the year when taxpayers typically look at proactive ways to reduce their current year tax bite with last-minute income/portfolio moves as well as look forward to next year to plan ahead as best they can. For tax year 2015, the Internal Revenue Service announced annual inflation adjustments, including the tax rate schedules, and other tax changes. Revenue Procedure 2014-61 provides details about these annual adjustments.
Kenneth W. Rudzinski
The tax items for tax year 2015 of greatest interest to most taxpayers include the dollar amounts listed below. Also see the accompanying chart for important additional 2015 tax items.
- The tax rate of 39.6% affects singles whose income exceeds $413,200 ($464,850 for married taxpayers filing a joint return), up from $406,750 and $457,600, respectively. The other marginal rates — 10%, 15%, 25%, 28%, 33% and 35% — and the related income tax thresholds are described in the revenue procedure.
- The amount that is used to reduce the net unearned income reported on the child’s return that is subject to the “kiddie tax” is $1,050 for 2015.
- The standard deduction rises to $6,300 for singles and married persons filing separate returns and to $12,600 for married couples filing jointly, up from $6,200 and $12,400, respectively, for tax year 2014. The standard deduction for heads of household rises to $9,250, up from $9,100.
- The limitation for itemized deductions claimed on tax year 2015 returns of individuals begins with incomes of $258,250 or more ($309,900 for married couples filing jointly).
- The personal exemption rises to $4,000, up from the 2014 exemption of $3,950. However, the exemption is subject to a phase-out that begins with adjusted gross incomes of $258,250 ($309,900 for married couples filing jointly). It phases out completely at $380,750 ($432,400 for married couples filing jointly).
- The Alternative Minimum Tax exemption amount for tax year 2015 is $53,600 ($83,400, for married couples filing jointly). The 2014 exemption amount was $52,800 ($82,100 for married couples filing jointly).
- The maximum Earned Income Credit amount is $6,242 for taxpayers filing jointly who have three or more qualifying children, up from a total of $6,143 for tax year 2014. The revenue procedure has a table providing maximum credit amounts for other categories, income thresholds and phase-outs.
- 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.
- The annual exclusion for gifts remains at $14,000 for 2015.
- The first $147,000 of gifts to a spouse who is not a citizen of the United States is not included in the total amount of taxable gifts made during 2015.
- The annual dollar limit on employee contributions to employer-based health care flexible spending arrangements increases to $2,550 from $2,500 in 2014.
- The foreign earned income exclusion rises to $100,800 for tax year 2015, up from $99,200 for 2014.
- The small employer health insurance credit provides that the maximum credit is phased out based on the employer’s number of full-time equivalent employees in excess of 10, and the employer’s average annual wages in excess of $25,800 for tax year 2015, up from $25,400 for 2014.
Please click below to view tax chart.
