The Internal Revenue Service (hereinafter the “Service”) released today new administrative authority for calendar year 2015 within Revenue Procedure 2014-61 that makes adjustments to more than 40 tax provisions, including the tax rate schedules, deduction levels, and many other tax provisions. It should be duly noted that Revenue Procedure 2014-61, is scheduled to be published in the Internal Revenue Bulletin 2014-47 on Monday, November 17, 2014 and can be cited here.
The primary adjustments included within this new administrative authority include, but are certainly not limited to:
• The tax rate of 39.6% affects singles whose income exceeds $413,200 (i.e., $464,850 for married taxpayers filing a joint return), up from $406,750 and $457,600, respectively. The other marginal rates (i.e., 10%, 15%, 25%, 28%, 33% and 35%) 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 calendar 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 in calendar year 2015 returns of individuals begins with incomes of $258,250 or more (i.e., $309,900 for married couples filing jointly);
• The personal exemption for calendar year 2015 rises to $4,000, up from the 2014 exemption of $3,950. Though, the exemption is subject to a phase-out that begins with adjusted gross incomes of $258,250 (i.e., $309,900 for married couples filing jointly). It phases out completely at $380,750 (i.e., $432,400 for married couples filing jointly.);
• The Alternative Minimum Tax exemption amount for tax year 2015 is $53,600 (i.e., $83,400, for married couples filing jointly). The 2014 exemption amount was $52,800 (i.e., $82,100 for married couples filing jointly);
• The 2015 maximum Earned Income Credit amount is $6,242 for taxpayers filing jointly who have 3 or more qualifying children, up from a total of $6,143 for tax year 2014. The revenue procedure has a table providing maximum credit amounts for other categories, income thresholds and phase-out’s;
• Estates of decedents who die during 2015 have a basic exclusion amount of $5,430,000, up from a total of $5,340,000 for estates of decedents who died in 2014;
• The annual exclusion for gifts remains at $14,000 for 2015;
• For 2015, the exclusion from tax on a gift to a spouse who is not a U.S. citizen is $147,000, up from $145,000 for 2014;
• For 2015, the foreign earned income exclusion breaks the six-figure mark, rising to $100,800, up from $99,200 for 2014;
• The annual dollar limit on employee contributions to employer-sponsored healthcare flexible spending arrangements (FSA) rises to $2,550, up $50 dollars from the amount for 2014; and
• Under the small business health care tax credit, the maximum credit is phased out based on the employer’s number of full-time equivalent employees in excess of 10 and the employer’s average annual wages in excess of $25,800 for calendar year 2015, up from $25,400 for 2014.
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