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    2014 Tax Year


2014 Tax Law Changes

Many of the changes to the tax code in 2014 can be traced to the sweeping tax cuts approved by Congress back in 2002. However, some changes were directly impacted by the dramatic rise in energy costs, as well as the economic downturn.

Below is a summary of the major 2014 tax law changes:

Pease Limitations on Itemized Deductions

The Pease Limitations on itemized deductions are triggered in 2014 on individuals with incomes of $254,200 or more. Married couples filing jointly have those limitations kick in at $305,050.

These limitations, named after Rep. Don Pease from Ohio, were supposed to completely disappear in 2010. During the Great Recession, the Pease Limitations were extended through the end of 2012, in an effort to spur economic growth. However, the Pease Limitations were brought back in 2013 at their original levels, indexed for inflation.

Personal Exemptions Rise

The personal exemption for 2014 is $3,950, which is up $50 from 2013 levels. As mentioned in the Pease limitations above, those personal exemption amounts phase out when adjusted gross incomes hit $254,200 for individuals and $305,050 or married couples filing jointly. For taxpayers earrning more than $376,700 individually (or $427,550 as a married couple filing jointly), the personal exemptions disappear completely.

Mileage Rates Decrease

For miles driven for business use between January 1, 2014 and December 31, 2014, the IRS provided a standard mileage rate of 56 cents per mile. While that is a decrease of half a cent over 2013 rates, it actually represents and increase of five cents per mile over 2011 rates.

Taxpayers who used their vehicles to get medical care were able to deduct 23.5 cents per mile, a decrease in half a cent over 2013 rates. Miles driven in service of charitable organizations could be deducted at rate of 14 cents per mile.

It's important to keep proper documentation to support your deductions. Ensure that you record begin and end odometer readings, the date that you made the travel, and the specific reason for claiming the mileage rate deduction. Common financial software like Quicken, QuickBooks, and Mint can help keep track of these.

The IRS has already announced mileage rates for 2015. Beginning January 1, 2015, the standard mileage rate will jump to 57.5 cents per mile for business miles driven. Also, miles driven for medical or moving purposes will stay flat at 23 cents per mile. The charitable mileage deduction will also remain unchanged at 14 cents per mile.

 

Alternative Minimum Tax Exemption Amount Rises

The AMT exemption amount for individuals has increased to $52,800, a rise of over $4000 since 2011 levels of $48,450. If married filing joining or a qualifying widow or widower, the AMT exemption rises to $80,800, a boost of over $6000 over 2011 levels of $74,450.

As part of the American Taxpayer Relief Act of 2012, the AMT no longer is patched each and every year. Instead, it is permanently adjusted for inflation, meaning we should see increases in AMT every year going forward.

For more information, download Form 6251.

 

Kiddie Tax

Unlike the AMT, the kiddie tax is not being adjusted for inflation. For 2014, the amount children can take home in income before paying any federal income tax remains locked at $1.000.

Click here for more information on the Kiddie Tax.

 

Standard Deductions for 2014 Tax Returns

For most people who don't itemize deductions, the basic standard deduction remained relatively unchanged in 2014. In 2014, the standard deductions are:

  • $9,100 for head of household (up from $8,950 in 2010)
  • $12,400 for married taxpayers filing jointly and qualifying widows or widowers (up from $12,200 in 2013)
  • $6,200 for married taxpayers filing separately (up from $6,100 in 2013)
  • $6,200 for single taxpayers (up from $6,100 in 2013)

Taxpayers are not able to claim the standard deduction if someone else can claim you as a dependant on their tax return.

 

All information is believed accurate at time of transmission, and no tax advice is implied. Always consult your tax professional if you have questions.

For more legal information, please click here.


 

 

 

 

 

 

 

 

 

 

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