20 The Queens Courier • february 5, 2015 for breaking news visit www.queenscourier.com tax tips Important Changes for the 2014 Tax-Filing Season by BARRY LISAK With the New Year come new tax laws. For most taxpayers with modified adjusted gross incomes (MAGI) under $200,000 (single) and $250,000 for married couples filing jointly, income tax rates won’t increase and most tax-relief provisions remain in effect. Here is a summary of major tax provisions that could impact you and your family. 1. Tax rates. Higher income tax, ordinary-dividend tax, and capital tax rates are in effect for 2014 for higher-income taxpayers. The 39.6-percent tax rate applies to income over a specified amount: $406,750 for single filers, $457,600 for married filers. These dollar amounts are inflation-adjusted for the 2014 tax year. The old rates ranging from 10 percent to 35 percent remain in effect for lower-income brackets and are now permanent. The long-term capital gains rate is 20 percent for single filers with incomes exceeding $406,750 ($457,600 for married taxpayers filing jointly). The top rate stays at 15 percent for most other taxpayers. 2. Itemized-Deduction and Exemption phase-out. Itemized deductions and personal exemptions, which is $3,950 for 2014, will be subject to the phaseout rules. Single taxpayers with incomes exceeding $254,200 (married taxpayers exceeding $305,050) will be impacted by both of these phase-outs. 3. Medical deduction. Only medical expenses that exceed 10- percent of your adjusted gross income (AGI) will be allowed to a deduction. However, taxpayers who are 65 years of age or older will still have a medical deduction floor of 7.5 percent through 2016. Also, the Flexible Spending Accounts (FSA) offered by employers has an annual cap of $2,500. 4. Medicare taxes. An additional 0.9-percent Medicare tax on earnings and 3.8-percent surtax on net investment income will be in effect for 2014. Individual taxpayers earning over $200,000 (married over $250,000) will be impacted. 6. Retirement amounts. For 2014, IRA contribution limits remain at $5,500 or $6,500 if participant is 50 or older. Annual contributions to plans such as 401(k)s remain at a maximum $23,000; $17,500 in regular contributions, plus $5,500 in catch-up contributions for those 50-plus. 7. American Opportunity Tax Credit (AOTC). The AOTC (formerly named the Hope Credit) is extended through 2017. Within income thresholds, single taxpayers $90,000 and married filing jointly, $180,000, this provision allows a credit up to $2,500 in qualified secondary educational expenses (tuition, fees, and materials) to be deducted for qualified students. 8. Alternative Minimum Tax (AMT). The AMT is permanently “patched” (with inflation adjustments). For 2014, the AMT exemption is $52,800 for single filers and $82,100 for joint filers. 9. Estate Taxes. In 2014, the maximum estate-andgift tax is 40%. The exemption amount is $5.34 million (indexed for inflation). 10. Gift Taxes. The annual gift exclusion amount remains $14,000 ($28,000 per couple). 11. Teacher Expenses. $250 “above-the-line” deduction for unreimbursed classroom expenses for educators. 12. Sales taxes. Deducting the general-sales-tax itemized deduction in lieu of taking a state income tax deduction is extended into the 2014 tax year. 13. Tuition-and-fees deduction. Subject to income requirements, the tuition and fees deduction (up to $4,000) is extended to 2014. 14. Child Tax Credit. You will be able to reduce your Federal income tax by up to $1,000 for each qualifying child under the age of 17. All taxpayers should be aware of these changes and plan accordingly. s LJC@loucarino.com Josephine Lam, CPA 41-25 Kissena Blvd., Ste. 108 Flushing, NY 11355 Tel: 718.888.0988 Fax: 718.888.1011 · Business & personal tax returns preparation · Tax planning & consulting · Accounting, bookkeeping & payroll services · Business registration & dissolution Email: jlam@jlamcpa.com Serving the Needs of Individuals & Businesses
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