Attention, ladies, it’s that time of year again. It’s tax season. New year, new rules. Here are 7 of some of the more overlooked tax changes for 2015:
#1: Retirement Contributions Remain Fixed
The IRS has a history of raising the maximum allowable contribution to retirement plans and IRAs. Not this year.
In 2015, the maximum allowable contributions remain static at $17,500 for elective deferral plans and $5,500 for IRAs.
Still, there are some small changes that should be noted:
Tax deductions for traditional IRA contributions are limited to those individuals in lower-income brackets. Likewise, individuals earning under $30,000 and families earning under $45,000 can receive credits amounting to $2,000 when they save for retirement.
#2: Deductions for Education Expenses Have Expired
Higher education is expensive. The traditional $4,000 deduction helped families to manage the price, but this expense is no longer deductible.
“Fortunately, all is not lost for those families that want to send their children to college”, says Amy Lloyd, a content director at Work Crowd, an enterprise software review site.
Families in most states can still deduct 529 contributions. These contributions, which can reach up to $14,000 per year, can be used on tuition, room and board, and materials, including computers.
#3: Most Home Upgrade Deductions are No More
Making a home more energy efficient is always a good idea. In the past, the federal government has supported the effort to upgrade homes by offering $500 tax credits.
Most of these home credits expired in 2014.
However, homeowners can still install certain solar materials and receive credits of 30 percent of the cost. Those considering this upgrade should do so quickly as that tax credit is slated for removal in the coming years.
#4: Commuter Deductions Drop by 48 Percent
The Mass Transit Benefit, used by many of those in metropolitan areas, will drop by almost half to $130 per month.
Instead of taking advantage of this previous savings, experts suggest that commuters utilize a payroll deduction plan for commuting expenses.
This is a pre-tax benefit, available to some companies, such as small business owners like Vegas Limo.
Individuals are also no longer allowed to deduct the sales tax on new cars. Those hoping to rid themselves of vehicles by donating a car to charity can still deduct their contribution, but they can now only deduct the amount it sold for and not the Blue Book value as they could in previous years.
#5: Small Businesses Home Office Deductions Go From $500,000 to $25,000
This makes Kevin O’ Leary’s recent epic rant about helping small businesses even more relevant.
Truthfully, the small business tax environment had grown leaps and bounds. In 2013, deducting home office expenses were simplified, but come 2014, the amount deducted will be drastically reduced.
Small business owners, regardless of where they are based, will be able to deduct up to $25,000. That is a significant decrease from the $500,000 allowed in previous years.
And unless you are keeping up with the ever-changing small business tax scene, it’s probably wise to get someone to do it for you.
“Accountants aren’t just crunching numbers. They’re saving me thousands of dollars each year with their small business tax advice”, says Nate Wood, co-founder of Utah Home Report.
#6: RIP State Income Tax Deductions
California, Oregon, New York, New Jersey, Vermont, and Washington, D.C…What do these places have in common?
Residents of these areas pay the highest income taxes in the country.
Historically, they have been able to offset the high income tax by deducting their state taxes each year. As of 2014, this will no longer be the case.
#7: Individuals Can Carry Over $500 in Unused Flexible Spending Accounts
This hopefully puts an end to the late-December Walgreens runs for people trying to use all their FSA funds.
Beginning in 2014, individuals can carry over up to $500 to the next year. This puts people in jeopardy, such as My Advertising Pays and other advertising companies.
Those utilizing flexible spending accounts (FSA) have long been plagued by the difficulty in determining exactly how much they should set aside for un-taxable medical expenses. Previous laws have stated that any unused FSA money is lost to the system.
Further reading: 2014 Deloitte Tax Guide