As tax laws change every year, America’s Tax & Accounting Service has identified the most significant changes for the tax year of 2014 that might affect our clients:
1) The Patient Protection and Affordable Care Act could well be the biggest change to taxes in 2014. Employers with more than 50 full-time equivalent employees will be facing a tax penalty if they fail to provide affordable essential health coverage to their employees.
Individuals who fail to purchase coverage might also be subject to a penalty. Adults could be facing a fine of $95, while the penalty for uninsured children will be $47.50. This fine will increase annually and, by 2016, will be $695 per adult or 2.5 percent of the total household’s taxable income, whichever is greater.
2) Higher Employer Plan Contribution Limits
Taxpayers will be able to contribute up to $18,000 to their 401(k), 403(b) and most 457 plans and the federal government’s Thrift Savings Plan in 2015. The catch up contribution limit will also increase to $6,000 in 2015 for a total contribution limit of $24,000 for employees age 50 and older.
3) Higher Income Limits for IRA Contributions
Income limits for deductible contributions to IRAs vary based on whether the taxpayer and/or his or her spouse are eligible to participate in an employer-sponsored retirement plan. The tax deduction for making a traditional IRA contribution is phased out for investors who have a workplace retirement plan and a modified adjusted gross income of more than $61,000 but less than $71,000 for individuals, and more than $98,000 but less than $118,000 for couples in 2015.
For individuals who don’t have a workplace retirement plan but are married to someone who does, the tax deduction for an IRA contribution is phased out if the couple’s income is more than $183,000 but less than $193,000 in 2015.
The maximum contribution for an IRA has not changed for 2015 and remains at $5,500 for people under 50, with an additional catch-up of $1,000 for those 50 and older for a total of $6,500.
Family Related Tax Items:
For 2015, the maximum EITC amount available is $3,359 for taxpayers filing jointly with one child; $5,548 for two children; $6,242 for three or more children (up from $6,143 in 2014) and $503 for no children. Phaseouts are based on filing status and number of children and begin at $8,240 for single taxpayers with no children and $18,110 for single taxpayers with one or more children.
For 2015, the value used to determine the amount of credit that may be refundable is $3,000 (the credit amount has not changed). Keep in mind that this is the value of the expenses used to determine the credit and not the actual amount of the credit.
We hope that you’ve found this information helpful. As always, we are available year round to help with your tax questions. We can be reached at: 813.983.0235 or 863.644.9756 or by email: [email protected]
