6 Important Tax Changes for 2015
With 2015 officially in motion, you may be in the mindset of preparing to file your 2014 taxes. However, you also need to consider the newest changes in the tax code for 2015 and starting planning now to avoid costly mistakes throughout the year. Planning ahead for tax changes and adjusting your budget accordingly can mean the difference between writing a large or small check to the IRS in 2016. To help you get started, here are a few of the big tax changes for 2015 and how they may affect you.
- 401(k) Limits: In 2014, the cap for employee contributions to 401(k) plans was set at $17,500. In 2015, that limit will increase to $18,000. What does this mean for you? If you do have a 401(k) plan through work, be sure to inform your payroll department to increase your contribution (beginning January 1st) to make sure you are saving the maximum allowable in 2015. The allowance for those 50 years old and older has also been increased from $5,500 to $6,000.
- Alternative Minimum Tax: The AMT is an income tax on corporations, estates, trusts, and individuals imposed by the government. Moving into 2015, the AMT exemption has been raised by 1.5% from 2014. The AMT exemption amount for FY 2015 is $53,600 for individuals and $83,400 for those filing jointly.
- Standard Deduction: In 2015, the standard deduction (the fixed amount that reduces one’s taxable income each year) will increase to $6,300 for single filers and $12,600 for those filing jointly. This important change is crucial to tax planning. If you are unable to itemize enough deductions to exceed your standard deduction, it may be the only tax break you receive from the government on your next year’s tax return.
- Affordable Care Act:
- For Employers: The ObamaCare Employer Mandate was set to begin in 2014, but was delayed until 2015. The Employer Mandate states that businesses with 100 or more full-time equivalent employees (30 hours or more per week) must provide health insurance to at least 70% for 2015 of their F/T employees and dependents (age 26 and under), or pay a fine. A way for businesses to circumvent any financial penalty involved making “employer healthcare arrangements” with their full-time staff members, which means the employer reimbursed employees for some or all of the premium expenses incurred for health insurance policies. However, under section 498D of the Internal Revenue Code, if these types of arrangements were done, the employer could be subject to a $100 excise tax per day per employee.
- For Individuals: The Affordable Care Act has been top of mind to many since being enacted. Part of its regulations mandates that most Americans must have health insurance or they are subject to paying a tax penalty. In 2014, the penalties were 1% of your household income or $95 per person (whichever is greater). Most people may have thought that was steep. However, in 2015, the penalties have increased to 2% of total household income or $325 per person. Those fees can add up quickly for the lower and middle class tax brackets.
- Flexible Spending Account Limits: In 2014, the annual limit for employee contributions to flexible spending accounts was set at $2,500 for qualified healthcare expenses. Beginning January 1, 2015, that limit will be raised $50 (up to $2,550). Those enrolled in flexible spending accounts through their employer need to make sure they opt in for the new maximum to get full benefit from the program.
- Tax Brackets: Income tax figures will once again be raised for 2015 at about 1.6% from 2014.
Unsure how these changes may affect you? Click here to contact a Scheffel Boyle Representative today!