|Pathways Advisory Group, Inc.|
Leslie Dermon, Paraplanner
It’s that time of year again. Here is a summary of some key 2015 provisions and updated brackets:
Tax Brackets: 2015 income tax brackets changed with inflation. See below for the 2015 brackets for Married Filing Joint Taxpayers and Single Taxpayers:
Married Individuals Filing Joint Returns and Surviving Spouses
Source: Forbes.com.Click here for a complete version of the 2015 Tax Tables.
Itemized Deductions and Personal Exemptions: Most taxpayers benefit from a Personal Exemption (increased to $4000 in 2015) for the filer and each dependent, and Itemized Deductions (on Schedule A). However, both are subject to reductions if AGI is over $258,250 for Single Taxpayers, and $309,900 for Married Joint Taxpayers.
Qualified Dividends and Capital Gain Tax Rates: Qualified dividends and capital gains rates remain the same in 2015: 0% for taxpayers in the 10% and 15% marginal tax brackets, 15% for taxpayers in the 25, 28, 33, 35% tax brackets, and 20% for those in the 39.6% bracket.
Personal Insurance: The individual mandate fine (for going without insurance) began in 2014 and will increase in 2015. The tax is typically the greater of two amounts: The basic fine ($325 per person and $162.50 for each family member under 18), or an income based levy (2% in 2015 of the household income over the tax return filing threshold).
Roth IRA Contributions: The maximum Roth IRA contribution remains at $5500 ($6500 for those who attain age 50 or older during 2015). The Adjusted Gross Income (AGI) limit that disallows contributions increased with inflation to $193,000 for Married Joint Taxpayers and $131,000 for Single Taxpayers. Contributions begin to phase out at AGI of $183,000 for Married Joint Taxpayers and $116,000 for Single Taxpayers.
Retirement Account Contribution: The maximum 401(k), 403(b) and 457(Deferred Compensation) contribution rises to $18,000 (up $500 from 2014) in 2015 ($24,000 for those who attain age 50 or older during the year).
Estate Tax Exemption: The Estate Tax Exemption also increased from $5.35 million in 2014 to $5.43 million in 2015. The tax rate for amounts exceeding the exemption remains 40%.
Gift Tax Exemption: The annual gift tax exemption (amount that can be gifted without requiring a gift tax filing) remains at $14,000 per person.
Social Security Benefits: As some of you already know, from your 2015 Social Security benefit statement, Social Security Benefits receive a cost-of-living-adjustment (COLA) of 1.7% this year.
Medicare Premiums: Similar to last year, Taxpayers have to fall below a Modified Adjusted Gross Income (MAGI) of $170,000 ($85,000 for Single Taxpayers) to pay the standard monthly Medicare Part B premium of $104.90.
Social Security Payroll Taxes: The Social Security wage base, upon which payroll taxes are due, increased from $117,000 in 2014 to $118,500 this year. Keep in mind the FICA tax rate (paid on income up to the wage base) remain unchanged at 6.2% for both employer and employee.
Medicare Tax: The Medicare tax rate remains at 1.45% (2.9% for Self Employed) for Married Joint Taxpayers with earned income below $250,000 ($200,000 for Single Taxpayers). For earned income above these thresholds, the Medicare tax rate increases to 2.35% (3.8% for Self Employed).
Something New for 2015: President Obama’s myRA has begun. Similar to a Roth IRA (maximum contribution of $5500, tax-free growth if the funds are used for retirement), the myRA invests in a conservative government bond fund only. The myRA has a maximum account balance of $15,000, but there is no minimum.
The above explanation is summarized. It is not all inclusive. Please confirm all specifics with your tax professional.
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