Another tax year end is upon us. It’s time to turn our attention to possible strategies that could reduce business, individual and other taxes for 2015.
Similar to last year, we are waiting for Congress to pass certain tax legislation that would have been so much more helpful to have occurred earlier in the year from a business and tax planning perspective. The educated opinion is that Congress will pass tax legislation prior to December 31, 2015 that will be retroactive for the 2015 tax year.
For 2015, the individual tax brackets will increase slightly and the personal exemption will increase to $4,000, although the exemption is subject to a phase-out.
For 2015, the top federal tax brackets for individuals are:
- 39.6% on Ordinary Income
- 43.4% with Investment and Passive Income
- 23.8% on Long-term Capital Gains and Qualified Dividends because of the 3.8% Net Investment Income Tax.
Further, there is the additional 0.9% Medicare Tax on Wages and Self-Employment Income above certain levels for certain taxpayers.
Certain education and child tax credits essentially remain the same for 2015. However, the use and benefit of many of these tax credits are phased out for high income taxpayers.
Most of the Retirement Plan limits and Contribution levels have increased for 2015. However, high income individuals must continue to be concerned with certain limitations. A few of the most common 2015 Benefits are as follows:
- Contributions to IRAs: $5,500
- Catch-up contributions to IRAs: $1,000
- Contributions to 401(K) and similar Plans: $18,000
- Catch-up contributions to 401(K) and similar Plans: $6,000
- Contributions to SIMPLEs: $12,500
- Catch-up contributions to SIMPLEs: $3,000
- Contributions to Defined Contribution Plans (SEPs): $53,000
- Maximum Compensation level for Qualified Plans and SEPs: $265,000
Estate and Gift Taxes
The Gift and Estate Tax Exemption and the Generation-skipping Transfer (GST) Tax Exemption both increased for 2015 to $5,430,000.
The Annual Gift Exclusion remains the same for 2015 at $14,000.
As we await tax legislation action by Congress, the following are certain key areas that we are hopeful will again be extended and effective for the 2015 tax year and perhaps beyond.
- The Section 179 expense deduction limitation of $500,000, the $2,000,000 Phase-out level and the expanded Section 179 property definition.
- 50% Bonus depreciation.
- 15 year straight-line depreciation for certain qualified leaseholds and other improvements.
- The Research and Development tax credit.
- Reduction in S corporation recognition period for built-in gains tax.
- Energy-efficient commercial buildings deduction.
- Incentives for alternative fuel and alternative fuel mixtures.
Other matters that impact businesses this year are:
The Affordable Care Act employer mandate, although delayed until 2015, is now upon us. Employer businesses now have certain reporting and filing responsibilities that may be challenging but still required. View our webinar, "Are You Ready for the New ACA Employer Reporting Requirements?" and download the handout for more information.
Fortunately there is a Small Employers Employee Health Insurance tax credit that is available. However, qualifying terms and conditions have to be considered.
Individual, business, estate and gift tax matters continue to be a complex, convoluted process to comprehend and manage successfully. We look forward to the opportunity to assist you in any or all of these tax matters.
We welcome the opportunity to meet with you to discuss tax planning strategies for your company. Click the button below for a complimentary consultation.
Lou Rendon, CPA, CVA
Lou Rendon has over three decades of experience in tax and financial matters for a wide range of companies with particular expertise in the construction industry. His areas of service include financial statement engagements, banking and surety consultations, individual business and corporate tax compliance, tax and financial planning, and business valuations. Contact Lou at [email protected] or 714.990.1040.
Frazer LLP has far-ranging experience in the specialized accounting methods for the construction and engineering industries. From tax and accounting compliance and consulting on purchase and sale of real estate, negotiating and tax free exchanges to cost segregation and business valuation, our team can provide you with expert tax, financial, and management advice in any stage of your construction business.