Each year, the IRS adjusts certain tax provisions, tax tables, and other tax items for inflation. On October 31, 2014, the IRS released Rev. Proc. 2014-61, which provides the annual inflation adjustment amounts for 2015. These adjustments will apply to your 2015 income tax return.
Included in the revenue procedure are inflation adjustments to the standard deduction and personal exemption. The standard deduction amounts for 2015 increase to $12,600 for married filing jointly and surviving spouses, $9,250 for head of household, and $6,300 for single or married filing separately. The personal exemption increases from $3,950 in 2014 to $4,000 in 2015.
The phase-out of itemized deductions for 2015 will impact taxpayers with adjusted gross income above $309,900 for married filing jointly and surviving spouses, $284,050 for head of household, $258,250 for unmarried and not a surviving spouse or head of household, and $154,950 for married filing separately.
The AMT exemption amounts for 2015 are $83,400 for married filing jointly and surviving spouse, $53,600 for single and head of household, $41,700 for married filing separately, and $23,800 for estates and trusts.
The threshold for the Kiddie Tax that applies to a child’s net unearned income increases from $1,000 in 2014 to $1,050 in 2015, meaning a child can make up to $1,050 of unearned income without paying federal income tax.
The revenue procedure also includes inflation adjustments for various credits. The maximum Earned Income Tax Credit available is $6,242 for taxpayers with three or more qualifying children, $5,548 for taxpayers with two qualifying children, $3,359 with one qualifying child, and $503 for taxpayers with no qualifying children.
The Hope Scholarship Credit for 2015 will be an amount equal to 100% of qualified tuition and related expenses not in excess of $2,000 plus 25% of those expenses in excess of $2,000 but not in excess of $4,000. Therefore, the maximum Hope Scholarship Credit allowable for 2015 is $2,500. The credit amount phases out ratably for taxpayers with modified adjusted gross income between $80,000 and $90,000 for single filers and $160,000 and $180,000 for joint filers.
If you have any questions on how these adjustments will impact your 2015 income tax return, please contact the tax professionals at Schneider Downs.
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