What's New for Federal Income Taxes 2014?
NEW YORK ( MainStreet) The Internal Revenue Service has announced many of the annual inflation adjustments to deductions, credits, phase-outs and rates for 2014.
Unless Congress changes the Tax Code, the following numbers apply for 2014 returns to be filed in 2015.
THE STANDARD DEDUCTION
- Single/Married Filing Separate = $6,200
- Married/Qualifying Widow(er) = $12,400
- Head of Household = $9,100
The Standard Deduction for a dependent is the greater of (1) $1,000, or (2) the sum of $350 and the individual's earned income (up to $6,200).
The additional Standard Deduction amount for the age 65 or older or blind is $1,200 for married individuals and $1,550 for Single and Head of Household.
The personal exemption is $3,950.
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 $254,200 for Single filers, $279,650 for Head of Household, $305,050 for Married Filing Joint or Qualifying Widow(er), and $152,525 for Married Filing Separate. Personal exemptions are totally phased out at AGIs of $376,700 for Single, $402,150 for Head of Household, $427,550 for Married Filing Joint or Qualifying Widow(er), and $213,775 for Married Filing Separate.
LONG-TERM CARE INSURANCE PREMIUM AGE-BASED DEDUCTION LIMITS
- Age 40 or less = $370
- Age 41-50 = $700
- Age 51-60 = $1,400
- Age 61-70 = $3,720
- Age 71 + older = $4,660
THE PEASE REDUCTION OF ITEMIZED DEDUCTIONS
Itemized deductions are reduced by 3% of the amount a taxpayer's AGI exceeds $254,200 for Single filers, $279,650 for Head of Household, $305,050 for Married Filing Joint, and $152,525 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).
CONTRIBUTION LIMITS FOR TAX-DEFERRED PENSION PLANS
- IRA = $5,500
- IRA Catch-Up Contributions at age 50 and older = $1,000
- SIMPLE Plan = $12,000
- SIMPLE Catch-Up Contributions at age 50 and older = $2,500
- 401(k), 403(b), 457, and federal Thrift Savings Plan = $17,500
- 401(k), 403(b), 457, and federal Thrift Savings Plan Catch-Up Contributions at age 50 and older = $5,500
Please note that these numbers are the same as were in effect for 2013.
The deduction for contributions to a traditional IRA by taxpayers who are active participants in a workplace retirement plan is phased out for Single and Head of Household filers with AGI between $60,000 and $70,000 and for those who are Married Filing Joint and Qualifying Widow(er) with AGI of $96,000 to $116,000.