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Plan Ahead: Tax Rates for 2015

February 2, 2015adminBlog0

Having to pay taxes is a constant; however, the rate you pay fluctuates from year to year. That fluctuation is based on the IRS altering the rates for inflation, your earnings, and your filing status.

Now is a good time to review your W-4 exemptions and adjust as needed to ensure you’re withholding the proper amount of tax.
Click here to use the IRS Withholding Calculator.

If you anticipate life changing events in 2015, it’s best to discuss your financial picture with Waddy Accounting to eliminate potential surprises on your tax liability.

Are you wondering what tax rate you will be paying next year? Here are the outlines for tax rates for 2015.

Single Filers

Taxable Income: Your Tax:
Not over $9,225 10% of the taxable income
$9,226, but not over $37,450 $922.50 + 15% of the excess over $9,225
$37,451, but not over $90,750 $5,156.25 + 25% of the excess over $37,450
$90,751, but not over $189,300 $18,481.25 + 28% of the excess over $90,750
$189,301, but not over $411,500 $46,075.25 + 33% of the excess over $189,300
$411,501, but not over $413,200 $119,401.25 + 35% of the excess over $411,500
$413,201+ $119,996.25 + 39.6% of the excess over $413,200

 

Married Filing Jointly (and Surviving Spouses)

Taxable Income: Your Tax:
Not over $18,450 10% of the taxable income
$18,451, but not over $74,900 $1,845  + 15% of the excess over $18,450
$74,901, but not over $151,200 $10,312.50 + 25% of the excess over $74,900
$151,201, but not over $230,450 $29,387.50 + 28% of the excess over $151,200
$230,451, but not over $411,500 $51,577.50 + 33% of the excess over $230,450
$411,501, but not over $464,850 $111,324 + 35% of the excess over $411,500
$464,851+ $129,996.50 + 39.6% of the excess over $464,850

 

Married Filing Separately

Taxable Income: Your Tax:
$9,225 10% of the taxable income
$9,226, but not over $37,450 $922.50 + 15% of the excess over $9,225
$37,451, but not over $75,600 $5,156.25 + 25% of the excess over $37,450
$75,601, but not over $115,225 $14,693.75 + 28% of the excess over $75,600
$115,226, but not over $205,750 $25,788.75 + 33% of the excess over $115,225
$205,751, but not over $232,425 $55,662 + 35% of the excess over $205,750
$232,426+ $64,998.25 + 39.6% of the excess over $232,425

Head of Household

Taxable Income: Your Tax:
Not over $13,150 10% of the taxable income
$13,151, but not over $50,200 $1,315 + 15% of the excess over $13,150
$50,201, but not over $129,600 $6,872.50 + 25% of the excess over $50,200
$129,601, but not over $209,850 $26,772.50 + 28% of the excess over $129,600
Over $209,851, but not over $411,500 $49,192.50 + 33% of the excess over $209,850
$411,501, but not over $439,000 $115,737 + 35% of the excess over $411,500
$439,001+ $125,362 + 39.6% of the excess over $439,000

Deductions for 2015
For tax year 2015, the standard deduction increases to $6,300 for single tax payers and married persons filing separately. For married tax payers who file jointly, the standard deduction is $12,600 (up from $12,400 for 2014). Finally, for those who file as Head of Household, the standard deduction is $9,250 for 2015.

If you are able to itemize your deductions, the limitation for individual tax returns kicks in at $258,250 (AGI) for single filers. The limitation for married couples filing jointly starts at $309,900.

Personal Exemptions
Personal exemptions for 2015 will be $4,000 for each dependent you claim, with the phase outs beginning at the same AGIs as the limitations on itemized deductions ($258,250 for single filers, $309,900 for married couples filing jointly).

New Depreciation Regulations for 2014

The self-employed, property owners, farmers, and 1099 contractors are now mandated to have a capitalization policy in place for 2014. These regulations affect the way in which you can capitalize (and not currently deduct) the cost of Tangible Property or Repairs & Maintenance of your property.

You may now write off individual items that cost $200 or less and last for 12 months or less. Tangible property exceeding those criteria will need to be evaluated to determine if they can be expensed or must be capitalized and depreciated over several years.

De Minimis Rule for Repairs & Maintenance
Taxpayers with audited financial statements may treat an item as an expense if they have a written repair/capitalization policy in place at the beginning of the year, and for taxpayers with audited financial statements, a new De Minimis rule allows the expensing of repairs and maintenance for amounts equal to or less than $5,000 or with a life of less than 12 months. Even if the taxpayer’s aggregate de minimis costs exceed this ceiling, it remains entitled to currently deduct the portion of those costs up to that ceiling. This rule does not apply to land or inventory. Note that businesses without audited financial statements may not use the $5,000 de minimis rule!

Small businesses without audited financial statements may now use a de minimis of $500 per invoice or item for repairs other than on buildings. If the cost exceeds $500 per invoice (or item), no portion of the property’s cost will be eligible for the de minimis safe harbor. An important change made by the regulations permits the taxpayer to deduct de minimis acquisition costs even when the acquired property is used in improvements (including materials and supplies used in improvements). For example, when the taxpayer purchases roofing materials to be used in connection with installing a new roof on an existing building, the costs of the roofing materials may be deducted under the de minimis rule even though they relate to an improvement to the taxpayer’s building structure. The final regulations provide that the de minimis rule is a safe harbor, elected annually by including a statement on the taxpayer’s timely filed original federal tax return for the year elected.

This change in regulation may require you to change your accounting method which will also require you to file Form 3115. Also see the IRS instructions for Form 4562 (Depreciation and Amortization) for additional information. (Note: If your first taxable year began on or after Jan. 1, 2014, you can make certain tangible property changes without filing a Form 3115.)

The IRS purports that these changes make how you report and claim tangible property easier for the small business taxpayer. The easiest solution is to contact us and let Waddy Accounting Services help you work through the new requirements, so you gain the best possible financial outcome.

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