NEW YORK (MainStreet) — After the Internal Revenue Service announced the 2015 inflation adjustments for pension plan contributions and the Social Security Administration announced its 2015 cost of living increases, the IRS also announced the rest of the 2015 annual inflation adjustments.
Here are the numbers that will apply to tax year 2015.
THE STANDARD DEDUCTION
- Single and Married Filing Separate = $6,300
- Married Filing Joint and Qualifying Widow(er) = $12,600
- Head of Household = $9,250
The Standard Deduction for a dependent is the greater of (1) $1,050, or (2) the sum of $350 and the individual's earned income (up to $6,300).
The additional Standard Deduction amount for those age 65 or older or blind is $1,250 for married individuals and $1,550 for Single and Head of Household.
The personal exemption is $4,000.
THE PEP REDUCTION OF PERSONAL EXEMPTIONS
Personal exemptions are reduced by 2% for each $2,500 ($1,250 if Married Filing Separate), or portion thereof, that a taxpayer’s Adjusted Gross Income (AGI) exceeds $258,250 for Single filers, $284,050 for Head of Household, $309,900 for Married Filing Joint or Qualifying Widow(er), and $154,950 for Married Filing Separate.
Personal exemptions are totally phased out at AGIs of $380,750 for Single, $406,550 for Head of Household, $432,400 for Married Filing Joint or Qualifying Widow(er), and $216,200 for Married Filing Separate.
LONG-TERM CARE INSURANCE PREMIUM AGE-BASED DEDUCTION LIMITS
- Age 40 or less = $380
- Age 41-50 = $710
- Age 51-60 = $1,430
- Age 61-70 = $3,800
- Age 71 + older = $4,750
THE PEASE REDUCTION OF ITEMIZED DEDUCTIONS
Itemized deductions are reduced by 3% of the amount a taxpayer’s AGI exceeds $258,250 for Single filers, $284,050 for Head of Household, $309,900 for Married Filing Joint or Qualifying Widow(er), and $154,950 for Married Filing Separate. The reduction cannot exceed 80% of total itemized deductions (not including any deductions for medical expenses, investment interest, and casualty, theft, or gambling losses).
STUDENT LOAN INTEREST
The deduction for student loan interest, capped at $2,500, phases out at AGI between $65,000 to $80,000 for Single, Head of Household and Qualifying Widow(er) and $130,000 to $160,000 for Married Filing Joint. No deduction is allowed on a Married Filing Separate return.
LIFETIME LEARNING CREDIT
The AGI phase-out range for taxpayers claiming a Lifetime Learning Credit is $55,000 to $65,000 for Single, Head of Household and Qualifying Widow(er) and $110,000 to $130,000 for Married Filing Joint and Qualifying Widow(er). No credit is allowed on a Married Filing Separate return.
THE ALTERNATIVE MINIMUM TAX
The AMT exemption amount is –
- $53,600 - Single and Head of Household
- $83,400 - Married Filing Joint and Qualifying Widow(er) $41,700 - Married Filing Separate
The AMT exemption is reduced as Alternative Minimum Taxable Income exceeds –
- $119,200 – Single and Head of Household
- $158,900 – Married Filing Joint and Qualifying Widow(er)
- $ 79,450 – Married Filing Separately
The 28% AMT tax rate kicks in at AMT net taxable income (after deducting the exemption allowed) of $185,400 ($92,700 for Married Filing Separate).
FOREIGN EARNED INCOME
The foreign earned income exclusion is $100,800.
FLEXIBLE SPENDING ARRANGEMENTS
The maximum amount an employee can contribute to an employer-sponsored “pre-tax” Flexible Spending Arrangement (FSA) for health care costs is $2,550.
ESTATE AND GIFT TAX
The annual gift tax exclusion remains $14,000 per person.
The estate tax exemption, also known as the unified credit, is $5,430,000.
--Written by Robert Flach for MainStreet