2015 Tax Changes Explained
Posted by: Brookside Admin
Hiring a professional to help you prepare your annual tax return is beneficial for a number of reasons. A professional will ensure that all the necessary paperwork is filed correctly and that all available deductions are taken advantage of. Perhaps the best reason to enlist a professional CPA, however, is simply that they will be educated on the most recent tax code and what changes have taken place since last year. Here is a short list of some of the changes you'll be dealing with for your next tax return.
- Tax brackets
Slight changes to the tax brackets are a normal occurrence. These adjustments are typically made to account for inflation, but failing to recognize these changes could result in you paying more or less than you need to. The brackets for 2015 have been increased by 1.6-percent from last year. That means a single filer will be in the bottom, 10-percent tax rate only for their initial $9225 of taxable income. That rises to $13150 for heads of household and $18450 for married couple filing jointly. Meanwhile, the top tax bracket of 39.6-percent only kicks in for a single filer at $413,200, for a head of household at $439,200 and for married couples filing jointly at $464,850.
The Affordable Care Act has complicated some tax returns because of the penalty charged for not having health insurance. In 2015, that fee was either 2-percent of your annual household income, which for an individual typically works out to about $10,150 since only the amount of income above the tax filing threshold is used, or $325 per person without health insurance in the household, with a maximum cap at $975. The greater of these two numbers is used as the fee. In 2016, the calculations will be 2.5-percent of your annual income or $695 per person, with a cap of $2,085. This significant change has many rethinking their current health insurance choices. There are certain exemptions available, which you can research at Healthcare.gov.
The way retirement plans like a 401(k) and IRA are taxed and regulated are also changed regularly. 401(k) contribution limits, for example, are typically raised by about $500 per person. For 2015, this means that the maximum contribution is $18-thousand. For those age 50 or older, catch up contributions also received a slight bump. The cap for catch-up contributions is now $6-thousand. New in 2015 for IRAs is the limit of one indirect rollover per year. This means you're able to withdraw all of the funds from one IRA without penalty and place the entire balance in a different IRA. There is still no limit on the amount of direct rollovers you're allowed, however.
These are some of the more basic changes that are in effect for this tax year. There are a number of more complex or subtle changes that a tax professional will understand, which will also help them navigate you to a better refund.
For help planning and preparing this year's tax return, call us at Brown Kinion CPAs. We have offices in Tulsa / Bixby and Broken Arrow for your convenience.