Deduction Limits - 2015 vs 2014

By: Javier Alarcon, CPA (Posted: 2/23/2015)

As we head into another busy tax filing season often times the questions come up on what the new deduction limits or "phase-out" thresholds are for certain areas of taxation. The deduction limits and phase-out thresholds are usually adjusted on an annual basis and can affect how the taxpayer calculates his or her taxable income for the current or prior year. In order to make our clients aware of the new limits and thresholds, we have included the following information with some of the more common deduction and phase-out limits you may need throughout this tax filing season.

SOCIAL SECURITY/MEDICARE

2015 2014
Social Security Tax Wage Base $118,500 $117,000
Medicare Tax Wage Base No Limit No Limit
Employee portion of Social Security 6.2% 6.2%

INDIVIDUAL RETIREMENT ACCOUNTS

2015 2014
Roth IRA Individual, up to 100% of earned income $5,500 $5,500
Traditional IRA Individual, up to 100% of earned income $5,500 $5,500
Roth and traditional IRA additional annual "catch-up" contributions for account owners age 50 and older $1,000 $1,000

QUALIFIED PLAN LIMITS

2015 2014
Defined contribution Plan limit on additions on Sections 415(c)(1)(A) $53,000 $52,000
Defined Benefit Plan limit on benefits (Section 415(b)(1)(A)) $210,000 $210,000
Maximum compensation used to determine contributions $265,000 $260,000
401(k), SARSAP, 403(b) Deferrals (Section 402(g)), 457 deferrals (Section 457(b)(2)) $18,000 $17,500
401(k), 403(b), 457 and SARSEP additional "catch-up" contributions for employees age 50 and older $6,000 $5,500
SIMPLE deferrals (Section 408(p)(2)(A)) $12,500 $12,000
SIMPLE additional "catch-up" contributions for employees age 50 and older $3,000 $2,500
Compensation defining highly compensated employee (Section 414(q)(1)(B)) $120,000 $115,000
Compensation defining key employee (officer) $170,000 $170,000
Compensation triggering Simplified Employee Pension contribution requirement (Section 408(k)(2)(c)) $600 $550

DRIVING DEDUCTIONS

2015 2014
Business mileage, per mile 57.5 cents 56 cents
Charitable mileage, per mile 14 cents 14 cents
Medical and moving, per mile 23 cents 23.5 cents

BUSIINESS EQUIPMENT

2015 2014
Maximum Section 179 deduction $25,000 $500,000
Phase out Section 179 $200,000 $2 million

STANDARD DEDUCTION

2015 2014
Married filing jointly $12,600 $12,400
Single (and married filing separately) $6,300 $6,200
Heads of Household $9,250 $9,100

PERSONAL EXEMPTION

2015 2014
Amount $4,000 $3,950

PERSONAL EXEMPTION PHASEOUT

2015 2014
Married filing jointly and surviving spouses Begins at $309,900 Begins at $305,050
Heads of Household Begins at $284,050 Begins at $279,650
Unmarried individuals Begins at $258,250 Begins at $254,200
Married filing separately Begins at $154,950 Begins at $152,525

DOMESTIC EMPLOYEES

2015 2014
Threshold when a domestic employer must withhold and pay FICA for babysitters, house cleaners $1,900 $1,900

KIDDIE TAX

2015 2014
Net unearned income not subject to the "Kiddie Tax" $2,100 $2,000

ESTATE TAX

2015 2014
Federal estate tax exemption $5.43 million $5.34 million
Maximum estate tax rate 40% 40%

ANNUAL GIFT EXCLUSION

2015 2014
Amount you can give each recipient $14,000 $14,000