TAX CHANGES FOR 2015

Regardless of your tax situation in 2014, there are changes that will affect a large number of taxpayers for 2015.

The Affordable Care Act mandates that all Americans who do not have health insurance pay a tax penalty as a result.  In 2014, the penalties were 1% of your household income or $95 per person, whichever is greater.  But in 2015, those penalties increase significantly to 2% of your total household income or $325 per person.  If you’re still not covered, make sure to get health insurance ASAP to avoid further penalties.

The limit on employee contributions to a 401(k) plan increased to $18,000 (up from $17,500).  The catch-up allowance for those aged 50 or older has also increased to $6000 (up from $5500).  If you want to maximize your contributions this year, contact your employer immediately.

The standard deduction rises to $6,300 for single taxpayers and $12,600 for married filing jointly.  That’s up $100 and $200, respectively, from 2014.

The personal exemption amount also goes up for 2015:  to $4000 for yourself, your spouse, and each dependent, up from $3,950 each in 2014.

Income tax brackets have also been adjusted up for inflation.  For instance, the highest tax rate of 39.6% will now apply to single taxpayers who make over $413,200 and married couples making $464,850.  (Yes, this is the infamous marriage penalty.)  Both figures are up about 1.6% from 2014.

Many tax laws expired at the end of 2014, and have yet to be renewed for 2015.  These include the $4000 tuition deduction for higher education, energy saving tax credits for certain home improvements, the deduction for mortgage insurance premiums, and many more.  Attempts were made earlier in the year to make them permanent, but the deductions/credits are not paid for and will add to the federal deficit.  Stay tuned!