Tax Season Recap and Looking Forward to Next Year

May 2015

Now that the crush of tax season is behind us, we thought it would be a good time to share some interesting filing statistics compiled by the Internal Revenue Service and look ahead to some changes that could affect your 2015 individual tax filings.

Tax Season Filing Statistics

The IRS keeps track of individual returns filed and related items, like refunds issued, on a cumulative basis throughout the year. According to their IRS website, as of May 8, 2015 the IRS had received 137,312,000 year 2015 individual income tax returns and processed 131,842,000 of them. These amounts are up 0.8% and 0.6%, respectively, compared to the prior year. Of the tax returns received, 120,253,000 were electronically filed, of which 71,135,000 were prepared by tax professionals, and 49,118,000 were self-prepared. The number of refunds issued and total amount of refunds issued was down from 101,176,000 refunds totaling $272.473 billion in the prior year to 100,320,000 refunds totaling $270.989 billion in the current year, through May 8. The average refund increased from $2,693 to $2,701. You can visit the IRS website to view individual filing statistics from 2010 to present.

A Look Ahead

Major tax law changes went into effect for the 2013 and 2014 tax years, including increased tax rates at the highest income levels, the 3.8% Medicare Tax on investment income, the 0.9% Additional Medicare Tax on employment income, and limitations to Itemized Deductions (see Two New Taxes on High-Income individuals and Two Hidden Taxes). So far, scheduled 2015 tax law changes are tame in comparison – they are simply annual inflation adjustments. Of course, because the year is not yet over, more changes are always possible (though perhaps not probable). Here is a summary of some of the tax adjustments announced.

The 2015 tax brackets were increased. The top 39.6% bracket begins at $413,200 for single filers and $464,850 for joint filers (up from $406,750 and $457,600, respectively). The standard deduction was raised to $6,300 from $6,200 ($12,600 joint). The income levels at which the 3% Itemized Deduction limitation takes effect is $258,250 single and $309,900 joint. The personal exemption amount was raised to $4,000 from $3,950 and is subject to phase-out starting with adjusted gross incomes of $258,250 single and $309,600 joint, with complete phase-out at $380,750 single and $432,400 joint. The Alternative Minimum Tax exemption was also increased, from $52,800 single and $82,100 joint to $53,600 single and $83,400 joint.

The Estate exclusion is increased to $5,430,000 for decedents who die during 2015 (up from $5,340,000 in 2014). The annual gift exclusion remains at $14,000 for 2015.

The exclusion from tax on a gift to a spouse who is not a U.S. citizen increased to $147,000 in 2015 from $145,000. The foreign earned income exclusion also increased, to $100,800 in 2015 (up from $99,200).

Changes were also made to some of the contribution limits for various retirement savings plans. Total contributions to all of your traditional and Roth IRAs, not including rollovers, cannot be more than $5,500 ($6,500 if you are 50 years or older), which is the same maximum limit as in 2014. The elective contribution limit for employees who participate in 401(k), 403(b), and most 457 plans increased from $17,500 to $18,000, and catch-up contributions (for employees aged 50 or older) increased from $5,500 to $6,000. The SEP-IRA contribution limit also increased and cannot exceed the lesser of: 1) 25% of the employee’s compensation, or 2) $53,000 (up from $52,000 in 2014). The contribution limitation for SIMPLE retirement accounts increased from $12,000 to $12,500.

These are just a few highlights of the changes scheduled for the upcoming tax year. If you have specific questions regarding any of the above, please reach out to your BNN tax advisor at 1.800.244.7444.

Disclaimer of Liability: This publication is intended to provide general information to our clients and friends. It does not constitute accounting, tax, or legal advice; nor is it intended to convey a thorough treatment of the subject matter.