So, the ides of May have come and gone. Which means it’s been a month since your 2014 taxes were due to be filed (and some two months since corporate filings were due). It’s time to consider what 2015 will bring- because tax planning should have started already. It’s way too late when the calendar reads 2016 to you wonder what your real tax bite will be.
So, if you plan to marry or get divorced, you need to know what being single or being married does to your after-tax income. Having a baby is expensive- but it does provide another exemption (unless your income exceeds a quarter million or so- because, then your personal exemptions are limited).
Not sure if you can itemize? (A general rule of thumb- if you don’t own a home- or don’t live in Manhattan, you probably shouldn’t- because the “standard deduction” will be higher). Above this paragraph, you will find the list of standard deductions (based upon filing status) for 2015.
(The Adjuvancy no longer posts the various 2015 tax brackets- even though they’ve been adjusted for “inflation”- because the website underwent a major upgrade and adjustment in 2018. The link used to be here.) And, remember these brackets are not your gross income- but your income after deductions and exemptions. If you see your income is approaching the next bracket, it may be a very smart idea to increase your charitable donations- or pay your property tax early. (Remember- paying your property tax early will affect your 2016 tax position, though.) And, those won’t be very useful if your income renders you subject to the Pease limitations (individuals whose net income exceeds $ 258,250 and marrieds whose net income exceeds $ 309.900)- because these limitations affect the maximum amount of your itemized deductions.
There’s also the alternative minimum tax (which was supposed to affect the rich, but it seems to afflict the middle class more). This is a more complex calculation (since certain deductions like accelerated depreciation [Section 179 deductions]) trigger special considerations.
And, let’s not forget the earned income tax credit (ranging from $3359 to $ 6242 for those with kids and $ 503 for the childless), the dependent care (child) credit of $3K, the adoption credit up to $ 13,400, and the Hope Scholarship Credit now maxed at $ 2500 (if your income is below $ 80K for singles and $ 160K for marrieds), the more limited Lifetime Learning Credit, among other items. (Remember, one person’s necessary credit is another’s loophole.)
Planning can save you a bundle of money. Start now.
