The Internal
Revenue Service (IRS) has released annual inflation adjustments for more than
40 tax provisions, including the tax rate schedules and other tax changes.
Details on the
adjustments are published in Revenue Procedure 2014-61.
A few items of interest are:
- The tax rate of 39.6 percent
affects singles whose income exceeds $413,200 ($464,850 for married
taxpayers filing a joint return), up from $406,750 and $457,600,
respectively. The other marginal rates – 10, 15, 25, 28, 33 and 35 percent
– and the related income tax thresholds are described in the revenue
procedure.
- The standard deduction rises to
$6,300 for singles and married persons filing separate returns and $12,600
for married couples filing jointly, up from $6,200 and $12,400,
respectively, for tax year 2014. The standard deduction for heads of
household rises to $9,250, up from $9,100.
- The limitation for itemized
deductions to be claimed on tax year 2015 returns of individuals begins
with incomes of $258,250 or more ($309,900 for married couples filing
jointly).
- The personal exemption for tax year
2015 rises to $4,000, up from the 2014 exemption of $3,950. However, the
exemption is subject to a phase-out that begins with adjusted gross
incomes of $258,250 ($309,900 for married couples filing jointly). It
phases out completely at $380,750 ($432,400 for married couples filing
jointly.)
Details on
these and other inflation adjustments can be found in Revenue
Procedure 2014-61, which will be published in Internal Revenue Bulletin
2014-47.
As 2014 winds down, there is
still time to act so you aren’t surprised at tax-time next year. There are a few steps you can take to avoid
owing more taxes or toward getting a larger refund than you expect.
Adjust
your withholding. If
you’re an employee and you think that your tax withholding will fall short of
your total 2014 tax liability, you may be able to avoid an unexpected tax bill
by increasing your withholding. If you
are having too much tax withheld, you may get a larger refund than you expect.
Report
changes in circumstances. If you purchase health insurance coverage through
the Health Insurance Marketplace, you may receive advance payments of the
premium tax credit in 2014. It is important that you report changes in
circumstances to your Marketplace so you get the proper type and amount of
premium assistance.
Change
taxes with life events. You may need to change the taxes you pay when
certain life events take place. A change
in your marital status or the birth of a child can change the amount of taxes
you owe.
Be
accurate on your W-4.
When you start a new job, you fill out a Form W-4. It’s important for you to accurately complete
the form.
Pay
estimated tax, if required. If you get income that’s not subject to
withholding, you may need to pay estimated tax.
This may include income such as self-employment, interest, or rent.
For more, see Publication
505, Tax Withholding and Estimated Tax.
To read the entire article,
please visit www.irs.gov.
