Important Tax Changes to Look out for in 2015

It’s about that time; that time in which you have to take all your financial information from 2014 to your accountant and hope that the news at the end of the day is not bad news. That’s right, friends; it’s tax time. No one likes tax time. No one wants to write a check to the government and give them even more of their hard-earned money, and we know that all too well. Unfortunately, that is just the reality for many working Americans, and there is nothing we can do about that. Tax time is one of the most important times of the year thanks to the fact that it’s illegal not to file an income tax return. Individual filers have until April 15 to send their returns to the IRS unless they file an extension of time that allows a few more months of time to file taxes. Before you get started on your own income taxes this year, you should take note of the many important tax changes that have been made for the 2015 filing season. Some of these tax changes might affect you and some might not. It’s always best to know for certain, however. With that said, here are the biggest tax changes of the year.

Standard Filing Deductions

This is good news for tax filers in a world filled with so many other unhappy personal finance moments. This means that the standard deduction you get for filing an income tax return has gone up slightly. The amount for a single filer has been raised to $6,300. The amount for a married couple filing a joint return has gone up to $12,600. This means single filers get an addition $100 tax deduction and married couples are being given an additional $200 tax deduction.

401K Limit Increase

Be sure to ask your HR or payroll department to file a form stating that you want to maximize the amount of your employee contributions so that you get the maximum amount allowed now that the limits have changed. Up slightly from last year, employees are now allowed to contribute $18,000 annually instead of just $17,500. You will want to ensure that you are contributing the max for tax purposes as well as for your retirement purposes. This is what’s going to make sure your retirement years are as financially stable as possible.

Flexible Spending Account Limits

This only applies to those with a health care FSA. If you don’t have one of these, you won’t need to bother yourself with this information. However, if you do have an FSA account, you will want to know that the limits rose approximately $50 since last year. This is something to take note of as it affects you in several different circumstances throughout the year.

Health Insurance Penalties

This is a big deal, especially since this is the first year in which these take effect. Most people are aware of the fact that they have to have health insurance now. The affordable healthcare act has made it illegal to go without healthcare coverage for all Americans, and this means you will have to pay a penalty if you do not have health insurance. If you did not have insurance in 2014, you will have to pay 1% of your total family income or $95. The IRS wants whatever is greater from you. This is not a huge deal right now unless you have a large family and no one had insurance. However, if your family did have insurance and now you do not, you will need to understand that the amount has officially changed. If you do not have health insurance in 2015, you will pay 2% of your family’s income or $325 per person who does not have health insurance in your household on your 2015 tax returns when they are filed in early 2016. It’s beneficial to apply for healthcare coverage so that you do not have to pay this penalty.

IRA Rollovers

This is something that just began, but it’s important to take notice of. It’s going to affect your taxes more next year than this, but you should know in advance how rolling over your IRA is going to affect your taxes when you have to file your income tax returns in a year. Taxpayers are now limited to only one IRA rollover per year, and that means you have 12 months to choose just how and when you want to take a rollover. Once you make this happen, you cannot do it again for another 12 months – not just a calendar year. If you choose to rollover your IRA again before that 12 month time frame is up, you are going to end up paying hefty taxes on that choice.

Social Security Increase

For those who are collecting social security, it should please you to know that the annual cost of living inflation has been announced and all taxpayers collecting that check will now receive an additional $22 per month on their social security check. If you are a married couple collecting social security, your monthly payment will increase $36. The federal government made the decision to raise payments by 1.7%. It might not sound like much to some taxpayers, but to others it is a significant increase and every little bit helps when living on a fixed income.

And One Important Tip: File Electronically

Now that you know about all the biggest tax changes of the year, go ahead and start working on your income taxes. Did you know that if you are due a refund, filing your return electronically will allow you to receive your income tax refund sooner rather than later? In fact, you could receive your refund – if you are owed one – as many as three to six weeks before those who file their income tax returns on paper through the mail? This is an important little tip for anyone due a refund and looking to get it as soon as possible.

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