William A. Smith
5 Important Tax Law Changes for 2015 You Need to Know
The end of the year is a time to reflect on the decision we made, the goals we met (or didn’t meet), and what kind of person we want to be for the New Year. For tax professionals, it’s more than that though – each year brings amendments to our country’s tax laws. While not all of them will affect you and your family, some will.
Here are some of the more important changes:
1) 401(k) contribution limits rise
The 2014 contribution limit minimized retirement account contributions to $17,500, not including the additional $5,500 “catch-up” contribution which requires you to be 50 or older. In 2015, these limits will rise to $18,000 featuring a “catch-up” of $6,000 (for those 50 and above). Employer-based retirement plans like 401(k)s can be powerful savings builders, especially if you use all the employer matching funds available.
Changes also apply to 403(b) plans, most but not all 457 plans, and the federal government’s Thrift Savings Plan.
For more information on this, call Bill Smith, your Income Tax Attorney in the DFW area.
2) Traditional IRA deduction eligibility widens
Although IRA contribution limits remain the same in 2015 as they did in 2014 (capped for the majority of us at $5,500 allowing a “catch-up” contribution of $1,000 if you are 50 and older), some IRA rules change. Your ability to deduct traditional IRA contributions from your taxable income is income-limited, specifying allowed amounts to be phased out as your income rises.
From the IRS:
The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes (AGI) between $61,000 and $71,000, up from $60,000 and $70,000 in 2014. For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range is $98,000 to $118,000, up from $96,000 to $116,000. For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $183,000 and $193,000, up from $181,000 and $191,000. For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.”
3) Roth IRA Eligibility Also widens
The AGI phase-out range rises from between $181,000 and $191,000 in 2014 to between $183,000 and $193,000 in 2015 for married-filing-jointly. Single folks and heads of households are different; the range rises from between $114,000 and $129,000 to between $116,000 and $131,000. If you’re earning too much to contribute to a Roth IRA in the usual way, you might consider a contribution to a nondeductible IRA and converting it to a Roth IRA. For more information concerning this expected changed, contact Bill Smith, your Tax Attorney of choice in the Dallas Metroplex.
4) IRA rollovers limited
Beginning in 2015, you will be limited to one IRA rollover per year. A rollover means taking money out of one IRA, holding it for fewer than 60 days, and then placing it into another IRA.
5) The myRA debuts
The U.S. Department of the Treasury has created another kind of retirement account offered through employers. The myRA, or “my Retirement Account” charges no fees while offering modest yet guaranteed growth. You can start a myRA with just $25 and can add as little as $5 at a time, though the more the better. Contribution limits here are the same for IRAs.
Check back in a few weeks for the next 5 changes coming in 2015. Until then, if you have any questions about how to best resolve your tax related issues, contact Bill Smith, your Tax Attorney in the DFW area.