The IRS has announced the new numbers for the 2014 tax year. These figures are for new tax brackets, changes in standard and itemized deductions and other important tax concepts. Most of these changes are adjustments due to inflation and cost-of-living. These new rates and schedules will not impact taxpayers until 2015. The rates for 2013 will not be affected by these changes this coming April. The new tax tables go into effect in a few months and will be used to calculate taxes for the following tax season.
One of the first obvious changes to the tax tables is the raising of the upper limits. All across the board, from single taxpayers to married filing jointly, the limits have been pushed up. This has caused many taxpayers to move down to a lower tax bracket. Standard deductions have also been increased for taxpayers, allowing more to be deducted from income when calculating adjusted gross income.
Itemized deductions will also undergo a lowering of restrictions with the income limit being reduced to $254,200 from the current $305,050. Personal exemption amounts are only increasing by $50, but phase-outs for these exemptions will be raised to include households with incomes below $376,700 for individuals and $427,550 for married couples filing jointly.
The alternative minimum tax exemption will go up $900 for both individuals and married couples, measuring in at $52,800 and $82,100, respectively. Earned income tax credit maximum amounts will also be raised to $496 for families claiming no children, $3,304 for one child, $5,460 for two children, and $6,143 for three or more children for married couples filing jointly.
The child tax credit and the “kiddie tax” will not change as compared to the current tax rates. With all the tax changes that will be occurring, it’s important to find tax professionals whose knowledge reflects these changes. Especially when one considers the changes to other credits and deductions, it’s recommended to find qualified individuals to ensure that credits are taken properly. Failing to ensure correct claiming may result in penalties, fees, interest, and, ultimately, tax debt.