Tax Year 2015: Things you should starting preparing for now.
Because of inflation adjustments required by law, the standard deduction, personal exemption and many other important tax numbers for the coming year will increase. Here are a few changes that will affect federal income-tax returns for the 2015 tax year, to be filed in 2016:
The basic standard deduction for 2015 will increase to $6,300 for single taxpayers (and married people filing separate returns) from $6,200 for this year. For married couples filing jointly, it will rise to $12,600 from $12,400 this year.
But before you automatically choose the standard deduction, check to see whether you would be better off itemizing your deductions, such as charitable gifts.
The standard deduction for those who qualify as “head of household” will rise to $9,250 from $9,100.
The amount and income thresholds for the earned income tax credit, a program designed to help the working poor, will change. For example, the Internal Revenue Service said the 2015 maximum earned income credit amount will be $6,242 for taxpayers filing jointly and who have three or more qualifying children, up from a total of $6,143 for tax year 2015.
Tax Year 2015
Planning to move and work overseas? For 2015, the foreign earned-income exclusion will be $100,800, up from $99,200 for 2015.
The personal exemption will be $4,000 for 2015, up from $3,950 for 2014. But, as the IRS points out, this is subject to a phase out that begins with “adjusted gross incomes of $258,250 ($309,900 for married couples filing jointly).” The exemption “phases out completely at $380,750 ($432,400 for married couples filing jointly.)”
People who make more than a certain amount get hit by a limitation on itemized deductions. For next year, that limit begins with incomes of $258,250 or more, or $309,900 for married couples filing jointly.
The federal estate-tax exclusion will rise to $5.43 million next year from $5.34 million this year.
Separately, many upper-income workers will owe slightly more next year in Social Security taxes. The reason: The maximum amount of earnings subject to the Social Security tax will increase to $118,500 in 2015 from $117,000 this year, the Social Security Administration said. That reflects an increase in average wages.
Of the approximately 168 million workers who will pay Social Security taxes next year, about 10 million will pay higher taxes because of this change, the SSA says.
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