2014 Tax Highlights

TAX CHANGES FOR 2014

Below are some of the highlights that may affect the preparation of your tax returns:

1)  PERSONAL EXEMPTIONS - Have been increased to $3,950.  The deduction will be reduced or eliminated for higher income taxpayers.

2)  STANDARD DEDUCTION -

 

2013 2014

Single

$6,100

$6,200

Married – Joint

$12,200

$12,400

Married – Separate

$6,100

$6,200

Head of Household

$8,950

$9,100

3)   PAYROLL TAXES - The wage ceiling on which Social Security is taxed has been increased to $117,000. Medicare tax is unlimited, but workers earning more than $200,000 (or couples earning more than $250,000) will have an additional 0.9 percent withheld.

4)   TAX RATES - Have remained the same, ranging from a low of 10% to a high of 39.6%. If your income is more than $406,750 (single) or $457,600 (married filing jointly) your tax bracket will be 39.6 percent. If you are in the top tax bracket, you will also be subject to a capital gains rate of 20 percent as well as a 3.8 percent surcharge tax on investment income for the Affordable Care Act.

5)  CHILD TAX CREDIT - Remains the same at $1,000 for each qualifying child younger than 17.  The deduction may be reduced or eliminated for higher income taxpayers.

6)  STANDARD BUSINESS MILEAGE RATE - The rate for 2015 is .57.5 cents per mile. The rate for 2014 was 56 cents per mile.

7)  401(K) CONTRIBUTION LIMIT – Was $17,500 for 2014. This will increase to $18,000 for 2015. Individuals who attained age 50 by the end of the tax year 2014 are allowed an additional “catch-up” contribution of $5,500 and will increase to $6,000 for 2015.

8) SELF-EMPLOYED PLANS (SEPS) - The lesser of 25% of a special computation used in determining the earned income of the self-employed individual or $52,000 for 2014 and will increase to $53,000 for 2015.

9) TRADITIONAL & ROTH IRA CONTRIBUTIONS - There is a $5,500 maximum annual contribution.  Individuals 50 or older may contribute $6,500.

10) ALTERNATIVE MINIMUM TAX EXEMPTION -

 

2013 2014

Single

$51,900

$52,800

Married – Joint

$80,800

$82,100

Married – Separate

$40,400

$41,050

 

11) NET CAPITAL GAINS & QUALIFIED DIVIDENDS RATE - The long term capital gains for 2014 are as follows:

Taxpayers in 10% or 15% Income Tax Bracket

0%

Taxpayers in 25%, 28%, 33% or 35% Income Tax Bracket

15%

Taxpayers in 39.6% Income Tax Bracket

20%

12) ADOPTION EXPENSE CREDIT - An income tax credit for qualified adoption expenses of $13,190.  This is subject to AGI limitations.

13) NON-BUSINESS ENERGY PROPERTY CREDIT - A tax credit is available for the installation of exterior doors and windows, insulation, heat pumps, furnaces, central air conditioners and water heaters installed in 2014.  The credit is equal to 10% of the expenditures or a maximum of a total combined credit limit of $500 for all years after 2005.

14) EDUCATOR DEDUCTIONS - A $250 above-the-line deduction for educator expenses to include unreimbursed expenses for books, supplies, computer equipment and supplementary materials used in the classroom.  Any additional costs can be deducted as a miscellaneous deduction if you itemize.

15) CHARITABLE DONATIONS - Recordkeeping requirements have been made tougher for both cash and non-cash charitable donations.  Must have a dated receipt from the charity, cancelled check or credit card statement to prove the donation.  Non-cash donations such as clothing and household items must be in "good" used condition or better.

16) KIDDIE TAX - In 2014, if your child is under the age of 18, first $2,000 of investment income is tax free.

If you would like more detailed information or have any questions, please feel free to call me.