Each year U.S. tax codes undergo various changes. Staying on top of these changes can help save you more money and avoid hassles and headaches come Tax Day. Here are two major tax changes in 2015 that you’ll want to know when you prepare:
Retirement Savings Tax Changes in 2015
Employer-based retirement plans like 401(k) can be powerful savings builders, so you’ll benefit from employer matching programs. Contribution limits for 401(k) plans rose to $18,000 annually, with a $6,000 catch-up for those 50 years old and above.
A significant change to the law is a new rollover limitation. Beginning in 2015, individuals are limited to a tax-free rollover from one IRA to another eligible IRA in any 12 month period. Prior to this year, individuals could exclude rollover distributions from one IRA to another from their gross income, if the lump sum distribution was deposited into another plan within 60 days. The old rules enabled you to take multiple two-month loans from an IRA on a tax-free basis. Unfortunately, the change limits you from such tax-free IRA loans. You can still make multiple tax-free transfers between eligible IRA’s during a twelve month period. However, there are certain rules and restrictions that apply. If you have multiple retirement accounts, it is critical that you seek guidance before taking distributions.
Health Care Tax Changes in 2015
New Guidelines for Healthcare Flexible Spending Accounts go into effect this year. These accounts allow you to save pre-tax dollars towards your health care expenses. Be aware that the IRS has a “use it or lose it” rule for FSAs, which means that any money you set aside must be used within the plan year, to avoid forfeiting any of the cash. If you carry over $500 into 2015, you are ineligible to participate in a Health Savings Account (HSA) in 2015. That’s right, ineligible for the entire year. This only applies to general purpose FSAs, not those for specific uses like dependent care or dental expenses. Contribution limits have increased to $3,350 for individuals and $6,650 for families.
Another biggie that’s changed in 2015: under the Affordable Care Act, the penalty for having no health insurance has increased to $325 per adult (or 2% of income). Even stiffer penalties are expected in the years to come.
This is just the tip of the iceberg as far as tax changes go in 2015. For more information and to learn how to maximize your bottom line, contact us today. We will ensure that you don’t miss a thing when filing your taxes.