2014 IRS tax law changes you should know about
When the calendar turns to a new year, there are always some changes to aspects of our lives for a variety of reasons. Some of these are positives, while others are challenges. For 2014, the Internal Revenue Service has changed some parts of the federal tax code that may affect your tax-filing situation immediately and moving forward. Here are some notable tax law changes for the new year:
New income tax brackets for 2014
Due to inflation and other factors, it’s a given that the income tax brackets will likely change each and every year. For 2014, the new IRS income tax brackets are as follows:
Tax bracket: 10%
Single filers: $0 to $9,075
Married filing jointly: $0 to $18,150
Head of household: $0 to $12,950
Tax bracket: 15%
Single filers: $9,076 to $36,900
Married filing jointly: $18,151 to $73,800
Head of household: $12,951 to $49,400
Tax bracket: 25%
Single filers: $36,901 to $89,350
Married filing jointly: $73,801 to $148,850
Head of household: $49,401 to $127,550
Tax bracket: 28%
Single filers: $89,351 to $186,350
Married filing jointly: $148,851 to $226,850
Head of household: $127,551 to $206,600
Tax bracket: 33%
Single filers: $186,351 to $405,100
Married filing jointly: $226,851 to $405,100
Head of household: $206,601 to $405,100
Tax bracket: 35%
Single filers: $405,101 to $406,750
Married filing jointly: $405,101 to $457,600
Head of household: $405,101 to $432,200
Tax bracket: 39.6%
Single filers: $406,751+
Married filing jointly: $457,601+
Head of household: $432,201+
2014 standard deduction and personal exemption amounts
The standard deduction has increased from $6,100 to $6,200 for single filers in 2014. For married couples who file jointly, it goes up from $12,200 to $12,400. It’s now $9,100 for head of household filers.
As for the 2014 personal exemption, the amount has gone up by $50 from $3,900 to $3,950.
Expiration of tax credits & tax deductions
A package of 55 tax breaks expired when the clock hit midnight on Jan. 1, 2014. Congress did not renew them for this year. Among these tax breaks are:
- Sales tax deduction for taxpayers in certain states
- Tax breaks that allow companies to write off research-and-development (R&D) costs
- Tax credits for businesses to hire veterans
- Tax credits for purchasing energy-efficient items for homes and businesses
- Tax credits for purchasing certain electric vehicles
- The Transit parity tax break
- Tax deductions for teacher classroom expenses
- Higher education tuition tax deductions of up to $4,000
- Companies may be able to claim larger tax deductions for repairing and replacing tangible property.
- New limits will be placed on certain IRA charitable contributions.
- Legally married same-sex couples can now file their taxes as married filing jointly thanks to a Supreme Court ruling on DOMA in 2013.
- New healthcare law fines could impact those with no health insurance or those with plans that don’t meet certain government guidelines as more aspects of the Affordable Care Act are implemented.
What these changes mean for you
These IRS tax changes and the expiration of these tax-saving opportunities will raise the tax liabilities for many individuals, small business owners, and larger corporations. While Congress has been known to retroactively renew certain tax breaks in the past to allow taxpayers to claim them for a specific year, these changes still leave plenty of doubt on the table in terms of the financial future of both individual taxpayers and financially-strapped small business owners. That is why it’s important to take full advantage of any tax breaks out there, particularly when there are fewer options available. It’s also essential to save money and plan ahead in case of further changes coming down the pipe.
For all of your small business accounting needs and to ensure you remain IRS compliant, turn to the experts at Corporate Tax Network. Call CTN today at 1-866-893-5730 or visit www.corporatetaxnetwork.com.