Tax Changes You Need to Know About in 2015

Tax Changes You Need to Know About in 2015, tax attornet & CPAEach year there are changes to the tax code that affect your tax return, and 2015 is no different. Here are the changes to be aware of for the coming year:

Healthcare

Everyone has been talking about it, but it still seems some are unaware of the stipulations of the Affordable Care Act. The ACA mandates that all Americans have qualifying health insurance coverage or pay a penalty to the IRS. The penalty in 2014 was 1% of your household income or $95 per person. But in 2015, the penalty increases to 2% of your total household income or $325 per person.

There are also a few 2015 changes regarding flexible spending accounts for healthcare costs that relate to rollover savings. If you carried over the allowed $500 into 2015, you are ineligible to save in a general purpose FSA this year. Unfortunately, it’s too late to spend what was left in your 2014 account to qualify, but now is a great time to discuss your health savings situation with your employer and/or your tax advisor.

Retirement

As of the first of this year, you can only make one rollover from an IRA to another IRA within a 12 month period. A rollover counts as withdrawing funds from one IRA, holding them for fewer than 60 days, and then depositing them into another IRA.

There are also changes to 401(k) limits this year. The limit on employee contributions increases to $18,000, so you are eligible to deposit $500 more than last year into retirement savings. In order to do this, you must let your employer know you want to increase your contribution. If you haven’t already, make the change now to take advantage of the most savings available.

Other increases are also available this year, including:

• Employees over the age of 50 are now allowed an additional $500 ($6,000 total in addition to the standard amount) for 401(k) “catch up” contributions
• Increases also apply to 403(b) and 457 retirement accounts
• Employees can now contribute $2,550 to their flexible spending accounts to put toward healthcare costs

Income

There are a few additional changes to be aware of that relate to the amount of money you earn in 2015.

First, the AMT exemption has increased to $53,600 for individuals and $83,400 for joint filers, which is a 1.5% increase from last year.

Income tax thresholds have been adjusted for inflation, too. The highest tax rate (39.6%) applies to single filers earning at least $413,200 annually and joint filers earning $464,850. This is an increase of about 1.6%.

Finally, 2015’s standard deduction increases to $6,300 for single filers and $12,600 for joint filers. The standard deduction for heads of household rises to $9,250. Keep in mind that itemized deductions such as medical costs, taxes, interest expense and charity donations provide a tax benefit only if in total they surpass the amount of the standard deduction.

Sources:
http://www.usatoday.com/story/money/personalfinance/2014/12/19/taxes-2014-w-2-retirement/19903221/
http://www.irs.gov/uac/Newsroom/In-2015,-Various-Tax-Benefits-Increase-Due-to-Inflation-Adjustments

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New Tax Laws and What They Mean to You

new tax laws, The Law Offices of Lawrence Israeloff, PLLC , Melville, NY 11747

Working with an experienced tax attorney makes it easier dealing with the ever-changing Federal & State tax situation

Every year changes are made to the tax law that affect the way you manage your money throughout the year and how you file your tax return in the new calendar year. As soon as you are comfortable with one aspect of tax law, changes are made and you must relearn everything you knew. Working with an experienced tax attorney makes it easier to deal with an ever-changing situation, but it is also important to have a general understanding of the current laws.

What do you need to know about the most recent changes to tax laws?

Effect of ACA (i.e.; Obamacare) on Your Taxes

The Affordable Care Act requires you to carry a minimum amount of health insurance. If your plan does not meet the requirements, you will be forced to pay a fine, which in 2014 equals 1% of your annual income or $95 for each person you claim as a dependent. Further changes could be enacted in the coming years, but most expect the fine to be higher in 2015. At this point, it is too late to apply for coverage to avoid the 2014 penalty, so speak with your tax attorney to determine the best way to handle the fee.

The ACA also included an additional 3.8% tax on investment income. The tax applies to those making more than $200,000 (or $250,000 as a married couple filing jointly), so try to realize capital gains during years you earn less than those limits. The use of income timing, installment sales, and other tax deferral strategies can be effective in managing this new tax.

Finally, the ACA requires a new 0.9% Medicare health insurance tax on wages for those earning more than $200,000. If you are self-employed, you should plan for this additional tax when calculating your estimated tax payments. If you are an employee, the tax will be added to your Medicare tax in your paycheck.

Energy tax credit

Energy tax credit opportunities have been extended to 2016, so you are still able to get a credit for certain energy efficient upgrades to your home. In most cases, the credit is 30% of the total cost of the product. If you were thinking of putting off utility or other upgrades until after the first of the year, you might want to reconsider so you are eligible to claim the credit on this year’s tax return.

Medical Expenses

In previous years, you were able to deduct medical expenses that surpassed 7.5% of your adjust gross income, but as of 2013, you can deduct them only if they surpass 10%. The 7.5% limit remains the same for those over 65 years of age. Despite the increase in the limitation, it is still important to plan for this opportunity when possible. For instance, paying a medical bill in one lump sum could qualify you for a tax break, whereas staggering the payments could result in a complete loss of tax benefits.

 

If you have questions about the most recent changes to the tax laws or you need assistance with tax planning, contact an experienced tax professional. Feel free to contact us to answer your questions at 516.537.4440

 

Source: http://www.fool.com/investing/general/2014/02/08/new-tax-laws-in-2014-and-how-to-plan-for-them.aspx

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