With just over a month remaining before the end of the year, 2014 will soon be behind us. Come the start of the new year on January 1, the IRS will usher in various tax changes that taxpayers need to be aware of.
Following are a few of the main tax changes you should keep in mind as we move into 2015.
Increases in Tax Brackets, Exemptions, and Deductions
Tax brackets, exemptions, and deductions have been increased beginning in 2015 to meet inflation.
The standard deduction is now as follows for 2015:
- $6,300 for those filing single
- $12,600 for those filing married filing jointly
- $9,250 for those filing head of household
- $6,300 for those filing married filing separately
In addition, the personal exemption will increase to $4,000, an increase of $50 over the amount for 2014. The increase applies for each personal exemption you can take, including those for the taxpayer, the taxpayer’s spouse, and the taxpayer’s dependents.
Expiration of Tax Deductions and Credits
At the end of 2013, over 50 tax deductions and credits that were part of the Taxpayer Relief Act of 2012 were allowed to expire. Various committees within Congress are evaluating which, if any, of the expired deductions and credits they will extend to apply for the 2014 tax year and possibly beyond. It remains to be seen how Congress will treat these tax items, whether extending them for a temporary length of time or making them permanent.
Some of the expired deductions and credits that affect a significant number of people include the following:
- Deduction of state and local sales tax
- Deduction of private mortgage insurance premiums
- Deduction for out of pocket expenses by teachers
- Deduction of tuition and fees paid toward institutes of higher education
- Credit for certain energy efficiency improvements made to a residence
- Exemption for forgiveness of certain mortgage debt
- Exemption for certain IRA distributions to charitable organizations
Increase in Tax Penalty for Failure to Obtain Health Insurance
Beginning in 2014, Obamacare required that individuals who did not qualify for an exemption had to obtain healthcare coverage. Healthcare coverage could include any of the following:
- A plan provided by an employer
- Medicare, Medicaid, veteran’s healthcare, and other similar programs
- Any other plan purchased through a healthcare marketplace
Those who did not obtain qualifying healthcare coverage had to pay a penalty on their income taxes.
In 2014, the penalty was the greater of:
- 1% of a taxpayer’s annual income above a minimum threshold, or
- $95 per adult and $47.50 per child, up to a maximum of $285 per family
In 2015, the penalty will increase to the greater of:
- 2% of a taxpayer’s annual income above a minimum threshold, or
- $325 per adult and $162.50 per child, up to a maximum of $975 per family
In 2016, the penalty will increase further to the greater of:
- 2.5% of a taxpayer’s annual income above a minimum threshold, or
- $695 per adults and $347.50 per child, up to a maximum of $2,085 per family
How can I learn more about how tax changes for 2015 will affect me?
Because the tax situation of every taxpayer is different, you will need to speak with a tax attorney to understand exactly how the tax changes will affect your tax situation. A tax attorney will have the training and experience to evaluate your tax situation in light of the new tax law changes to the Internal Revenue Code.
When you are ready to get help from a tax attorney, you can call the phone number at the top of this web site or complete the form below. A tax attorney will get in touch with you to begin getting you the help you need, so take the first step today.
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Mark has been a contributor to legal web sites related to bankruptcy, tax, and criminal law since 2011. He has an Accounting degree from Texas A&M University.