2015 Tax Brackets
Note carefully that these tax brackets take effect on January 1, 2015. They do not apply to your 2014 taxes.
The brackets show a modest expansion over 2014, and this will slightly lower everyone’s income taxes. For example, in 2014, the 10% bracket applied on income up to $9,075 for singles and $18,150 for married couples filing jointly. In 2015, the 10% bracket applies up to $9,225 for singles and $18,450 for married couples—an increase of $150 and $300 respectively. This means that you’ll pay a 10% income tax instead of a 15% tax on that additional amount of income in 2015. A savings of $15 for singles and $30 for married couples.
On the other end of the income scale, the top tax rate of 39.6% applies to singles whose income in 2015 exceeds $413,200, $464,850 for married couples filing jointly, up from $406,750 and $457,600 in 2014, respectively.
Standard Deduction
The standard deduction has also gone up. The standard deduction for singles in 2015 is $6,300 and $12,600 for marrieds filing jointly. An increase of $100 and $200 respectively. The standard deduction for heads of households has gone up to $9,250 for 2015; it was $9,100 in 2014.
Personal Exemption
The personal exemption in 2015 is $4,000, up from $3,950 in 2014. However, the exemption is phased out for individuals with adjusted gross incomes of $258,250-$380,750, and for married couples with AGIs of $300,900-$432,400.
Itemized Deductions
The ability to take itemized deductions is also phased out for taxpayers whose incomes exceed certain levels. For 2015, these “Pease limitations” begin for individual taxpayers with incomes of $258,250 or more, $309,900 for married couples filing jointly.
AMT
The Alternative Minimum Tax exemption amount for 2015 is $53,600 for singles, and $83,400 for marrieds filing jointly, up from $52,800 and $82,100 respectively.
Kiddie Tax
The amount of unearned income a child can receive without have to pay income tax is $1,050 for 2015, the same as for 2014.
Retirement Plan Contribution Limits
The annual contribution limit for employees who participate in 401(k), 403(b), and most 457 retirements plans is $18,000 in 2015, up from $17,500 in 2014. The catch-up contribution limit for employees aged 50 and over who participate in such plans is $6,000 in 2015, up from $5,500 in 2014.
Self-employed taxpayers with solo 401(k) plans or SEP-IRAs may contribute up to $53,000 in 2015, up from $52,000 in 2014.
IRAs
The limit on annual contributions to Individual Retirement Arrangements (IRAs) remains unchanged for 2015 at $5,500. The additional catch-up contribution limit for individuals aged 50 and over remains $1,000.
Estate Tax
Estates of people who die during 2015 will have a basic exclusion amount of $5,430,000, up from $5,340,000 for 2014. Meanwhile, the annual exclusion for gifts remains at $14,000 for 2015. For 2015, the exclusion from tax on a gift to a spouse who is not a U.S. citizen is $147,000, up from $145,000 for 2014.
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Under the 2015 rules, the standard mileage rate for the use of a vehicle is:
57.5 cents per mile for business use
23.5 cents per mile driven as medical or moving expenses
14 cents per mile driven for charitable purposes
The 2015 mileage rate reflects an increase of 1.5 cents per mile for the business mileage rate, over 2014.
These mileage rates apply for miles driven starting January 1, 2015. For miles driven during the 2014 calendar year, you must use the 2014 mileage rates.
The medical, moving and charitable mileage rates are staying the same as 2014’s rates.
The business mileage rate increase came as a bit of a surprise. Gas prices actually had gone down in the weeks leading up the new standard’s announcement.
But the rate was likely determined well in advance. In the past, the IRS has said it calculates standard mileage rates based on an annual study of vehicle costs.
Claiming the Standard Mileage Rate for Business
Small business owners and self-employed individuals use the standard mileage rate to calculate the tax-deductible costs for using a vehicle for business purposes.
Taxpayers have the option of using the IRS standard mileage rate instead of keeping track of actual expenses of operating a vehicle. The IRS points out that to claim actual expenses, the taxpayer must maintain “adequate records or other sufficient evidence.”
Most people prefer to use the standard mileage rate because it’s easier and involves less recordkeeping.
Keep in mind, to claim the standard mileage rate, you still must keep track of the actual number of miles driven and the business purpose. Typically that is done by noting mileage information in a notebook, mobile app or software program (such as an accounting program or expense tracking app).
Then you multiply the number of miles driven by the applicable IRS standard mileage rate to determine the mileage deduction.
Using the standard mileage rate is still simpler than trying to calculate all the actual expenses of operating your vehicle for business purposes, such as gasoline, maintenance, etc.
]]>While an average of 35 percent of the management accountants worldwide polled by the IMA said they prefer a rigid work schedule, that wasn’t true in the United States, where only 18 percent said they like a rigid work schedule. In contrast, 43 percent of the management accountants surveyed in China, 36 percent in the United Arab Emirates and 43 percent in Saudi Arabia prefer a rigid work schedule. The results come from the IMA’s Global Salary Survey, which polled management accountants in those four countries.
“We asked in our survey the extent to which our members around the world desired to have more flexible career paths, as opposed to a rigid career path that might lead to faster advancement,” said IMA vice president of research and policy Raef Lawson. “We found some interesting results. The members in the United States by a very large margin preferred to have a flexible career path with slower advancement, as opposed to a rigid career path and faster advancement. That points to the increasing desire of employees in general to have that flexibility.”
However, in the other countries surveyed, IMA members seem to prefer a more rigid career path and less balance between their work and personal life than in the U.S., he noted. The poll also revealed different attitudes among male and female accountants.
“The typical stereotype came through in general in this survey that men were more desirous than women of a rigid career path with faster career advancement, and women were more desirous of a flexible career path, possibly because of family considerations,” said Lawson. “But the one exception to this was in Saudi Arabia, where women were much, much more desirous of a rigid career path. That was very interesting. I think it is a reflection of maybe the economic situation there and the opening up of the country to be a little bit more liberal in terms of career prospects for women, and women being very desirous of pursuing that.”
In terms of generational differences among management accountants, the IMA survey found a desire to have a more rigid career path in order to achieve faster career advancement was greatest among the Millennials (ages 18 to 34), followed by Gen X (age 35 to 50), and then the Boomers (ages 51 to 69).
“Note that while the percentage of those preferring more job flexibility at the cost of slower advancement is greatest for Gen X, that is due, at least in part, to a portion of the Boomers having already reached retirement age,” said Lawson. “Excluding those for whom this is not a relevant consideration, there is a consistent pattern of desiring more career flexibility as one gets older. It is interesting to note that Millennials, despite their reputation, are, like prior generations, quite eager to pursue career advancement.”
As part of the IMA salary survey, respondents were also asked whether they planned to change jobs within the coming year. Those working in general accounting were most likely to be contemplating a change, while those working in education were least likely to be contemplating a move. Respondents working in public accounting were next most likely to be planning on changing their jobs. This could be related to the traditional “up or out” employment model of CPA firms, the IMA noted.
“In many countries over half of the respondents were interested in changing their jobs within the coming year, so it really does show a desire for people to advance their careers, through changing their jobs and possibly employers,” said Lawson.
However, that was probably less prevalent in the United States and more prevalent in the Middle East, he added.
“In Saudi Arabia, for example, 58 percent of our members are looking to change jobs within the coming year, and in the United Arab Emirates it was 56 percent,” said Lawson. “In China, it was 31 percent, but that was actually down from the prior year, when it was over 50 percent. In the U.S., it’s less. I think that’s a reflection of the income that folks make in these various countries and the desire to improve their lives.”
The IMA also asked the management accountants it polled why they might want to move to another country. “There were a variety of reasons that were very prevalent,” said Lawson. “The most prevalent was to improve their quality of life. Looking at this by gender, it was more important in China for the female members, whereas in the Middle East it was more important for male members, but that would be a reflection on the economic circumstances of life in these countries and the cultural background, the opportunity to pursue new career opportunities was important. That was important to males in China and KSA [Kingdom of Saudi Arabia] and then more important to females in the UAE. An increasing salary was important in many countries. It was much more important in the Middle East than in China. I think that reflects increasing wage rates in China and the emergence of their middle class, but it was more important to males everywhere than our female members. Men tend to be money oriented.”
In tandem with the survey, the IMA has a “competency crisis” initiative to encourage educational institutions to train management accountants. “As employees become increasingly mobile, it’s becoming increasingly difficult for companies to find employees with the right skills,” said Lawson.
By Michael Cohen
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However, almost half of college students (48 percent) reported having less than $100 in their bank account at some point in the last year. In addition, thirty-eight percent said that they had borrowed money from friends or family in the last year and more than one-in-ten (11 percent) missed a bill payment.
The survey, which was conducted online among 751 college students who will be enrolled in fall of 2015, on behalf of the American Institute of CPAs by Harris Poll in August, highlights the differences between students’ perception of their financial literacy skills and the reality.
The survey found that, despite the nearly universal feeling among college students about the importance of personal financial management skills – 99 percent said they were either extremely or very important –they are not actively taking steps to develop their knowledge in this area. Only one-in-four college students (23 percent) say they seek out personal financial management information and incorporate it into their spending and saving habits frequently or often, compared with two-in-five (41 percent) who say they rarely or never do so.
“For many students, college is their first time making independent financial decisions. With this opportunity comes serious responsibility, and if they aren’t making informed, intelligent decisions it can have a negative impact on the rest of their financial lives,” said Ernie Almonte, chairman of the AICPA’s National CPA Financial Literacy Commission, in a statement. “This fall, we encourage students to take ‘financial literacy 101’ by establishing a budget, tracking their spending and expenses, and reviewing it on a monthly basis. By incorporating these positive behaviors, students will be better equipped to make intelligent financial decisions later in life.”
Members of the AICPA’s Financial Literacy Commission say that establishing and following a budget is one of the most important things a person can do to take control of their financial situation and build for the future. However, the survey found that only two-in-five (39 percent) students reported following a monthly budget. Of those who follow a monthly budget, 42 percent said they learn how to budget from their parents or relatives with 37 percent saying they learned on their own.
“Parents of college students should definitely encourage their children to establish a monthly budget as a means of keeping their spending in check while they are in school,” added Almonte. “Establishing a monthly budget is the foundation upon which other positive financial behaviors are built. There are resources on the AICPA’s 360 Degrees of Financial Literacy and Feed the Pig websites that teach students how to create a budget and provide them tips and tools for staying on track.”
While many college students need to develop better financial habits, the survey found that more than 8-in-10 (84 percent) say they are extremely or very interested in learning how to make better personal financial decisions.
The AICPA’s National Financial Literacy Commission suggests the following tips to help improve students' financial literacy and make better decisions while they are in school and beyond:
Get started: Visit the AICPA’s 360 Degrees of Financial Literacy website to use the free budget calculator specifically designed for college students. The calculator allows you to input your expenses and income for an eight-month school year running from September through April.
Review your plan: Look at your budget on a monthly basis and see if there are differences between your budget and your actual spending on a monthly basis. If there is a gap, determine if your budget or spending needs to be modified.
Build a credit score: It's a good idea to start to establish a positive credit history by having a credit card in college. But it’s critical that you don't use it unless you can pay it off, or it is an absolute emergency. Late night pizza or fancy lattes are not emergencies.
Set a goal for summer earnings: Figure out how much money you’ll need to get through the semester to get you fixed things like utilities, cell phone bill, transportation costs (i.e. car payment, insurance, bus fare, etc.), and rent if you're living off campus. Use that as a goal for how much money you’ll need to save from working over the summer and start the semester from a position of financial strength.
By Sean McCabe
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