End of Year Giving & Tax Update

In the last two months, the IRS announced that there are various tax benefits will increase on January 1, 2014, due to inflation. More than 40 provisions will be affected, with some of the most relevant listed below:

Singles with income exceeding $406,750--and $457,600 for married taxpayers who file a joint return--are taxed at 39.6 percent. This amount is up from $400,000 and $450,000, respectively.

Increased Standard Deduction

  • Married persons filing separate returns and single taxpayers pay an increased standard deduction of $6,200.
  • For tax year 2013, the deduction for married couples who file jointly is $12,400, up from $6,100.
  • For tax year 2013, the deduction for single taxpayers is $12,200.
  • Heads of household also pay an increased standard deduction of $9,100, up from $8,950.

The Limitation for Itemized Deductions Claimed on Tax Year 2014

  • Returns of individuals begins with incomes of $254,200 or more.
  • Returns for married couples filing jointly begins at $305,050.

The Personal Exemption of Tax Year 2015

  • The Personal Exemption of Tax Year 2015 rises to $3,950, up from the 2013 exemption of $3,900.
  • A phase-out is applied to the exemption, which begins with adjusted gross incomes of $254,200.
  • The phase-out adjusted gross income for married couples filing jointly is $305,050.
  • The exemption phases out completely at $376,700.
  • The exemption for married couples filing jointly completely phases out at $427,550.

The Alternative Minimum Tax Exemption

  • Amount for tax year 2014: $52,800
  • Amount for married couples filing jointly: $82,100
  • Amount for tax year 2013: $51,900
  • Amount for married couples filing jointly: $80,800

The Maximum Earned Income Credit Amount

  • The amount is $6,143 for taxpayers filing jointly who have 3 or more qualifying children, up from a total of $6,044 for tax year 2013.
  • The revenue procedure has a table providing maximum credit amounts for other categories, income thresholds and phase-outs.

Estates of Decedents

  • Estates of decedents who pass away during 2014 have a basic exclusion amount of $5,340,000, up from a total of $5,250,000 for estates of decedents who passed away in 2013.

The annual exclusion for gifts remains at $14,000 for 2014.

The annual dollar limit on employee contributions to employer-sponsored healthcare flexible spending arrangements (FSA) remains unchanged at $2,500.

The foreign earned income exclusion rises to $99,200 for tax year 2014, up from $97,600, for 2013.

The small employer health insurance credit provides that the maximum credit is phased out based on the employer's number of full-time equivalent employees in excess of 10 and the employer's average annual wages in excess of $25,400 for tax year 2014, up from $25,000 for 2013.

Source: http://www.irs.gov/uac/Newsroom/In-2014,-Various-Tax-Benefits-Increase-Due-to-Inflation-Adjustments

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Together we can navigate the path that best suits your needs. Noah B. Herbold is here to address your estate planning and tax concerns. To learn more, please email noah @ocestateplanning.net for more information. It is important to have a knowledgeable lawyer by your side to keep you informed and help you make the best decisions. We can help you avoid unnecessary difficulties and get through any of these processes as painlessly as possible. So plan ahead and call us today for your complimentary consultation.


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