The following is a summary of the most common items relevant to the majority of American taxpayers. Complete information written in the IRS tax speak we know and love may be found here.
STANDARD DEDUCTION: Singles and married persons filing separate returns may clam a deduction of $6,300 (up from $6,200 in 2014). Married couples filing joint returns and surviving spouses may claim a deduction of $12,600 (up from $12,400 in 2014). The standard deduction for heads of household rises to $9,250 from $9,100.
ITEMIZED DEDUCTIONS: The Pease limitations for 2015 will begin at $258,250 of income for individuals and $309,900 for married couples filing jointly. This limitation was phased out from 2006 – 2010 and eliminated in 2011 – 2012. The impact of its return in 2013 marked a “back door tax hike” by effectively increasing the top marginal tax rates.
PERSONAL EXEMPTIONS: For 2015 the amount rises to $4,000 from $3,950 in 2014. The phaseout begins with Adjusted Gross Income (“AGI”) of $258,250 for individuals and $309,900 for married couples filing jointly. Personal exemptions are completely phased out at incomes over $380,750 for individuals and $432,400 for married couples filing jointly.
ALTERNATIVE MINIMIMUM TAX (“AMT”): For 2015 the exemption is $53,600 for individuals (up from $52,800) and $83,400 (up from $82,100) for married couples filing jointly.
401(k) CONTRIBUTIONS: The elective deferral (including 403(b) and most 457 plans) increases to $18,000 (up from $17,500). The catch-up contribution for employees aged 50+ increases to $6,000 (up from $5,500).
IRA CONTRIBUTIONS: No change here – still a maximum of $5,500. Similarly the catch-up contribution for those aged 50+ remains at $1,000.
FLEXIBILE SPENDING ACCOUNTS (“FSA”): The annual employee contribution to employer-sponsored healthcare FSAs inches up slightly from $2,500 to $2,550.
QUALIFIED TRANSPORTATION FRINGE BENEFIT: The limitation for transportation in a commuter highway vehicle and any transit pass is $130/mo. For qualified parking the figure is $250/mo.
FEDERAL ESTATE TAX EXEMPTION: Estates of decedents who die during 2015 have a basic exclusion of $5.43 million (up from $5.34 million in 2014).
FEDERAL GIFT TAX EXCLUSION: The exclusion for gifts remains at $14,000/yr. The exclusion from tax on a gift to a spouse who is not a U.S. citizen increases from $145,000 to $147,000.
KIDDIE TAX: The amount of unearned net income a child can take home without paying any federal tax is $1,050.
ADOPTION CREDIT: For 2015 a credit of $13,400 is available for the adoption of a special needs child. For all other adoptions the credit is limited to qualified adoption expenses and capped at $13,400. Phaseouts apply beginning at Modified AGI (“MAGI”) in excess of $201,010 with a complete phaseout at MAGI of $241,010 or more.
EARNED INCOME TAX CREDIT (“EITC”): The maximum credit is $3,359 for taxpayers filing jointly with one child, $5,548 for two children and $6,242 for three or more children.
HOPE SCHOLARSHIP CREDIT: The maximum credit available is $2,500 calculated as the amount equal to 100% of qualified tuition and related expenses not in excess of $2,000 plus 25% of those expenses in excess of $2,000 but not in excess of $4,000. Income restrictions apply starting at MAGI of $80,000 for individuals and $160,000 for joint returns.
LIFETIME LEARNING CREDIT: Income restrictions apply here as well beginning at MAGI of $55,000 for individuals and $110,000 for joint returns.
STUDENT LOAN INTEREST DEDUCTION: The maximum deduction for interest paid remains unchanged at $2,500. Phaseouts apply at MAGI in excess of $65,000 for individuals and $130,000 for joint returns.
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