4 Tax and Monetary Changes in 2015 You May Have Missed

Tax code, investment laws, and savings programs change every year. If you aren’t keeping up, you may be missing out on some important changes that can have a dramatic impact on your finances. Most of us know about the big changes, like the tax implications of the Affordable Care Act. But there are a lot of smaller changes that don’t get as much press. Here are 4 of those changes that went into effect this year. Your payroll services expert in Billings, MT explains how they can make a huge difference on your finances.

Retirement Plan Limits Increase by $500

If you think that you have maxed out your 401(k) or 403(b) plan, you might want to look again. In 2014 the contribution limit was set at $17,500 with a $5,550 catch up for those who are aged 50 and above. Those limits have changed and you can now put in $18,000 and catch up an additional $6,000 if you are over 50 years old. The best part is that any money you put aside won’t be taxed until you take it out.

For those who don’t have access to a 401(k) or 403(b), but you do have a different employer sponsored plan, there is still good news. The limits on nearly all of the employer sponsored plans are increasing by $500-$1,000. The bad news: IRA’s are still at the $5,500 they were at last year.

Standard Deduction Increases by $100

When you file your taxes you get the choice of itemizing your deductions, or taking the standard deduction. Depending on your living situation, how much you give away throughout the year, and other factors, you may benefit from one or the other.

For those who don’t have a lot of deductions throughout the year, there is good news. They get an extra $100 ($200 if married) to write off. This brings the deduction up to $6,300 for a single filer, and $12,600 for a married couple.

Social Security Recipients Get a Raise

If you collect social security, you can rejoice… sort of. Your cost of living increase bumps up your benefit by 1.7%. For the average recipient that means $22 extra per month. Not a lot, but can make a big difference to those who have this as their only source of income.

Since the Social Security program is running out of money, or at least that’s what many believe, they need to bring in some extra cash. The upper limit on what is taxable for social security has also increased by 1.3% going from $117,000 to $118,500.

Obamacare Penalty Will Double

The Affordable Care Act was signed into law a few years ago now. But only last year was the penalty enforced for not having insurance. Last year it was just 1% of your income, or $95 (whichever is greater). Considering that most people make over $9,500 per year, the penalty is essentially 1% of your income.

In 2015, that penalty bumps up to 2%, or $325 (whichever is greater). Again, most people make more than $16,250, so that penalty is essentially 2% of your income.

If you make $50,000 per year, you will owe $1,000 in penalties if you don’t have insurance. It’s still cheaper than buying insurance, but why take that risk?

Practical Taxes is Up To Date on the Laws

Here at Practical Taxes we are a full services accounting firm in Billings, Montana. That means we have to stay up-to-date on these tax laws, and that means you get the benefit of our knowledge. Whether you are looking for someone to help with quarterly tax filings, yearly tax preparations, payroll services, or business consultation, we are here to help. Give us a call at 406-894-2050 to make an appointment today.