There will be some changes to the tax code come 2015, so your next prepared tax return should take advantage of all the benefits that lead to a bigger refund or lower tax bill.
The tax code is like a constantly shifting novel. It’s language is always being altered by Congress, and the Internal Revenue Service also mixes up the rules it establishes when it comes to enforcing and interpreting it.
So this year is no exception. Here are a few changes to the tax code for 2015.
Some of the biggest alterations to the tax code are due to the Affordable Care Act.
Also known as Obamacare, the nation’s healthcare reform law mandates that most Americans purchase health insurance. Not doing so brings a tax penalty: 2014’s penalty was the greater of 1% percent of household income or $95.
The modification for 2015 is that the penalty rises to the greater of 2% of household income or $325 per person. If your household has multiple people lacking coverage, those penalties will certainly impact your tax returns.
There will also be another shift to healthcare tax law in 2015. People can contribute money to what are called flexible spending accounts for certain medical costs. The amount of money people can contribute rises from $2,500 to $2,550, giving people a bit more of an advantage for using this money for healthcare. The tax kicker is that this money isn’t subject to payroll taxes, giving you a big tax break. That’s a valuable change.
A slight difference is coming to a very common tax break provided to taxpayers. The standard deduction increases from $6,200 to $6,300 for individuals, and from $12,500 to $12,600 for married couples filing together. This tax deduction is given to every taxpayer every year.
The standard deduction is a key part of tax preparation and planning. If you’re unable to use enough itemized deductions exceeding $6,300, then the standard deduction automatically becomes part of your tax planning strategy.
Another 2015 tax change relates to retirement planning.
People contributing money to their 401(k) plans were limited to just $17,500, but that limit increases to $18,000 for 2015.
Also, for people 50 and over who are trying to save as much as possible to their 401(k) plan before retirement hits, the “catch-up” limit also increased $500 from $5,500 to $6,000. That means taxpayers 50 or older can contribute a total of $24,000 in 2015 and beyond.
While people 50 or older can put more of their money into retirement, they may not be using any Bitcoins for that.
Bitcoins have been all around the news and the internet. The virtual currency has seen its value rise and fall over the past year or two, but the IRS declared that Bitcoins aren’t currency. Rather, the IRS deems Bitcoins a good that can be bartered. So for tax preparation purposes, declare the market value of the Bitcoins on your tax returns.
Every year sees switches to the tax code and to the IRS’s rules and procedures. To keep up with those new alterations, make sure your tax preparation strategy takes advantage of all the twists and turns so you have a great tax return.
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