What Do These 8 Tax Changes Mean for You?

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Recently, there have been some important changes in tax law I feel you should know about. Starting this month, there are eight different changes that may affect how you pay your taxes in 2015. Today, we'll give you a brief rundown of each.
  1. Health Insurance Penalty: Part of the Affordable Care Act mandates that all Americans have health insurance or pay a tax penalty as a result. In 2014, the penalty was 1% of your household income, or $95 per person. This year the penalty is 2% of household income, or $325 per person.
  2. 401(k) Limit: The limits for 401(k)'s are going up this year. You can now put up to $18,000 in, which is a $500 increase of last year's cap. Make sure you tell your payroll company to adjust your contributions beginning now, so you can save the maximum amount allowable for the year. 
  3. Catch-up Allowance: For individuals over 50, the catch-up allowance for those over 50 has been increased to $6,000 from the $5,500 cap that was previously in place. 
  4. Flexible Spending Account Limit: The annual limit on employee contributions to flexible spending accounts is now $2,550 for qualified care expenses. That's up $50 from 2014, so make sure you opt-in for this maximum amount if you take advantage of a healthcare FSA.
  5. Standard Deductions: The standard deductions, a basic tax break given to all Americans each
    year, rise to $6,300 for single filers and $12,600 to joint filers. 
  6. Tax Brackets: Income tax thresholds have again been adjusted up for inflation. The highest tax rate, 39.6%, now applies to single filers making over $413,200 and couples making over $464,850. Both of these figures are up about 1.6% since 2014.
  7. IRA Rollovers: Beginning in 2015, you can only make one rollover from an IRA in a 12-month period. This is a little bit tricky because you can still make as many trustee-to-trustee transfers as you like. The IRS is trying to eliminate the practice of taking money, holding it for 60 days, and then putting it into a new account. To protect yourself, limit all rollovers to direct transfers in 2015 if you plan on moving money more than once.
  8. AMT Changes: The Alternative Minimum Tax is quite the headache for many Americans. Since certain breaks can significantly reduce your tax bill, the IRS created AMT to set a limit on those benefits and insure a minimum tax burden on everyone. The AMT exemption for 2015 is $53,600 for individuals or $83,400 for joint filers. 
That's a lot of information to digest at once. If you have any specific questions about these changes, or would like more details about how you can prepare for the new tax year, don't hesitate to give me a call or shoot me a quick email. I would truly love to chat about how you can prepare for the coming year.

Until next time, have a great day!

Ed Lloyd CPA
Ed Lloyd & Associates, PLLC