Advance projections released for 2015 tax numbers

Advance projections released for 2015 tax numbers

Each year the IRS is required to make inflation adjustments to hundreds of tax numbers in the tax law. Advance projections of what some of the 2015 numbers will be have recently been published.

The top tax rate of 39.6% is projected to start at income exceeding $413,200 for single taxpayers and $464,850 for married taxpayers. The projected standard deduction is $6,300 for singles and $12,600 for married couples filing jointly. The alternative minimum tax exemption for singles will increase to $53,600 and it will increase to $83,400 for married couples filing jointly. The personal exemption amount for 2015 is projected to increase to $4,000.

Don't make this tax mistake

Don't make this tax mistake

You're probably well aware that interest from municipal bonds is generally not subject to income tax or the 3.8% Medicare surtax. So don't make the mistake of turning tax-free income into taxable income by holding municipal bonds in the wrong kind of account. Municipal bond income in a retirement account will be taxed as ordinary income when you eventually take distributions from the account. Keep bonds in your non-retirement accounts to maintain the nontaxable treatment of the income they generate.

Can you claim an exemption for your college-age student?

Can you claim an exemption for your college-age student?

If your child is a full-time student under age 24, claiming an exemption for him or her on your tax return may depend on your passing the support test. Support includes food, clothing, and educational expenses such as tuition and fees. Your child cannot have provided over one-half the cost of those expenses. If you fail this support test, you can't take a dependency exemption and certain education tax breaks.

Make time for a year-end tax review

Make time for a year-end tax review

Take some time to review your tax situation for 2014 while there are still a few months to make tax-cutting adjustments. With more of the Affordable Care Act going into effect for 2014, both individuals and businesses will find that an investment in a year-end review could make a significant difference in their final tax bill.

Important reminder for employers

Important reminder for employers

A reminder to employers: Effective January 1 of this year, you may no longer reimburse employees for their individual health insurance policies or pay the premiums directly to the insurance company on a pre-tax basis. Employers that continue to pay employee's premiums or reimburse their payment must include these amounts in the employee's taxable wages or be subject to substantial penalties. Only if the employer offers a group plan can pre-tax dollars be used for health insurance premiums.

IRS reminds taxpayers about education credits

With schools back in session, the IRS has issued a reminder to taxpayers not to overlook available tax credits for education expenses. Tax credits are applied directly against the income tax you owe. Two available credits: the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). The AOTC can be up to $2,500 annually for an eligible student and is 40% refundable. That means you could get money back when the credit exceeds your tax bill. The maximum LLC is $2,000 and is not refundable. You can claim only one type of education credit per student each year.

October 15 is final tax deadline

October 15 is final tax deadline

If you requested a six-month extension to file your 2013 income tax return, you face a major deadline on October 15. That's the final date for filing your 2013 return; the IRS generally does not give filing extensions beyond that date.

October 15 is also the deadline for undoing a 2013 conversion of a regular IRA to a Roth IRA. If you did a conversion to a Roth last year, you can switch it back to a regular IRA without penalty if you do so by October 15.

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