2015 Tax Changes to be aware of now

Tax laws change each year and the best way to take advantage of the benefits of the changes, and mitigate the disadvantages of the changes, is to be aware early in the year and plan the year accordingly. Here are 7 main 2015 tax changes that will affect individuals in 2015.

1. The Health Insurance Penalty incurred as a result of not having health insurance will ramp up from just 1% of your household income or $95 per person (whichever is greater) to 2% of total household income or $325 per person (whichever is greater). Be sure you have insurance in place for yourself and your  family starting in January of 2015.

2. The limit on employee contributions to a 401(k) plan will increase $500 from $17,500 to $18,000. Make sure you have your accounting department increase your contributions starting in January to take full advantage of this benefit. These new contribution levels also apply to 403b and 457 retirement plans.

3. The Standard Deduction rises to $6,300 for single filers and $12,600 for married filers. Knowing this number is important to your tax planning because if you do not have enough deductions to surpass this amount, this is the only tax break you will be getting in 2015.

4. The annual limit on employee contributions to flexible spending accounts is up $50 to $2,550. Taking advantage of a health care FSA is a great way to save on your tax burden, as you are able to pay for medical expenses with pre-tax dollars.

5. Tax brackets will also be changing in 2015. The highest percentage of tax (39.6%) will now apply to single filers who make more than $413,200 and married filers that make more than $464,850. This is up about 1.6% from 2014.

6. Starting in 2015, you can only make one single rollover from an IRA in a 12-month period. This changed because people were withdrawing their IRA money from one account, and then re-depositing before the required deadline, in effect creating a short-term interest free loan for themselves. You will still be allowed  to move money from one provider to another as many times as you wish, but you will only be allowed to withdraw one time.

7. Maximizing your deductible expenses for a given year typically allows you to minimize your income tax – but not always! The IRS created the Alternative Minimum Tax to ensure a minimum tax burden for all, regardless of deductions. The exemption amount for 2015 will be $53,600 for single filers and $83,400 for married filers.

Good tax planning will help you pay as little income tax as possible in the new year. Consider major expenses, such as a home with many deductible expenses, and their affect on your annual tax liabilities. Consult to be sure you have the best plan in place for 2015.