Here is some useful information for this year's taxes:
Tax Law Changes for 2015 taxes
Penalty for the uninsured: Under the Affordable Care Act (otherwise known as Obamacare), individuals who choose not to get health insurance through the government exchanges or through their employers will have to pay an additional tax. If you don’t have health insurance coverage in 2015, you will be required to pay the higher of these two amounts:
- 2 % of your yearly income above the tax filing threshold (generally about $10,150.00) up to a maximum cost of the national average premium to purchase a ‘Bronze Plan’ from the federal healthcare exchange or…
- $695.00 per person ($347.50 per child under 18). The maximum penalty using this method is $2,085.00.
New paperwork for employers related to the Affordable Care Act: In addition to the increased tax penalties around the Affordable Care Act this year for uninsured individuals, there are also new rules for employer-required coverage. For 2014, the IRS released form 1095-B and form 1095-C as optional paperwork for employers. For your 2016 filing, this paperwork is now mandatory to show proof of insurance.
Higher taxes: In addition to the deductions levels changing for standard deductions, the income thresholds for each tax bracket also change. The final income numbers are not yet available from the IRS, but Wolters Kluwer Tax & Accounting (http://www.wolterskluwer.com/pages/home.aspx) suggests the thresholds listed below will hold. For 2016, the information services estimates that taxable incomes over the following levels will be taxed at the rate of 39.6%:
- Married filing separately: $233,475.00
- Unmarried individuals: $415,050.00
- Head of household: $441,000.00
- Married filing joint: $466,950.00
Capital gains: Unmarried individuals with income over $200,000.00 and married couples filing jointly with income over $250,000.00 will also pay a 3.8% medicare surcharge tax on investment income, thereby increasing the effective rate on capital gains to 23.8% (20% plus 3.8%).
Standard deduction amounts: The 2015 amounts are as follows:
- Married filing jointly (&surviving spouse): $12,600
- Married filing separately: $6,300.00
- Sigle: $6,300.00
- Head of Household: $9,250.00
Changes in Your Life
In order for your tax planning to be effective, your records must be kept up to date. During 2015, have there been any changes in your life that might affect your personal tax situation, such as a different employment status, the birth of a new child, or the purchase of a vacation home? As you look ahead to 2015, do you foresee any changes that may affect your financial situation? These are all things you must consider that can change your refund or payment status for upcoming taxes.