What's New for the 2015 Tax Filing Season

Tax laws undergo some minor changes every year, such as inflation adjustments, renewal of deductions, new taxes, and tax increases. As the 2015 tax filing season has started, it is important to stay informed on the latest changes to the tax code and how they can affect you. This article will explore three key areas where some of the biggest changes have been made to the Internal Revenue Code (IRC).

Affordable Care Act Changes for 2015

The Affordable Care Act is the law of the land that requires most individuals to have health insurance or risk paying a tax penalty. Per the federal health law's individual mandate, individuals above certain income thresholds should get health insurance coverage if they are not covered by public programs such as Medicare and Medicaid. If health coverage is not supplied through his or her job, an individual may choose to purchase an individual private policy or get covered under the state-operated insurance marketplace.

Those who do not have the minimum level of coverage should be wary because they will be subjected to IRS penalties at the end of the tax year. Here is a brief summary of the non-compliance penalties: the penalty for the 2014 tax year is one percent of income for both individuals and families or $95 for single adults and $285 for families, whichever is greater. This may not seem bad at all when compared to insurance premiums; however, the fact is, the penalty structure is formulated to increase over time. In 2015, the fine will rise significantly to $325 per adult and up to $975 for a family or 2% of income. In 2016, the penalty will be sky high: $695 per individual and $2,085 for a family or 2.5% of income.

Small-business owners obtaining insurance through the Small Business Health Options Program (SHOP) marketplace can qualify for tax credits and tax breaks. Businesses that employ less than 25 full-time workers and pay average annual salaries of less than $50,000 can make use of this program for group health coverage. Per ObamaCare's employer mandate, businesses with more than 100 full-time employees will have to provide health coverage to at least 70% of their workers starting in 2015. This rule does not apply to companies with 50 to 99 full-time workers until Jan 1, 2016.

New Limits on IRA Rollovers in 2015

Finally, some good news from the IRS! Contribution limits to 401(k), 403(b), and other qualified retirement plans have now increased by $500, bringing them to $18,000 in 2015. The catch-up contribution limit for individuals who are 50 or older has also increased by $500.

A new year ushered in a new rule from the IRS that put restrictions on the number of IRA-to-IRA rollovers. Starting in 2015, taxpayers can do only one rollover in a 12-month period, irrespective of how many IRAs the individual has. A second 60-day IRA-to-IRA rollover could result in a 10% early withdrawal penalty, and the distribution will be subject to taxation. The old rules allowed individuals to do one such rollover per year for each IRA that they owned, which created penalty-free and interest-free loans. Sadly, the new change limits taxpayers from taking such tax-free rollover provisions.

There is no reason to be alarmed, since this new rule change does not apply to traditional IRA to Roth IRA conversions or trustee-to-trustee transfers. This direct rollover transfer method lets investors transfer funds any number of times between IRA accounts without taking control of the money. This transfer is tax-free and does not trigger the 10% early withdrawal penalty. Get expert guidance if you hold multiple IRA accounts and are planning to do transfers but are not confident about whether they fall within the rollover limit or the distribution is tax-free.

2015 Tax Rates and Other Inflation Changes

For 2015, inflation-based adjustments are made for all tax brackets: the top 39.6% tax bracket, for example, will start at $413,200 for unmarried filers (up from $406,750 in 2014) and $464,850 for married joint filers (up from $457,600). The standard deduction for the 2015 tax year is $6,300 for single filers and $12,600 for married joint filers. The personal exemption gets an increase of another $50 to $4,000 in 2015. Individuals in the 25%, 33%, and 35% federal income tax brackets will pay the same 15% on capital gains, but taxpayers in the 39.6% bracket will have to pay more, as they will now be taxed at a 20% rate on long-term capital gains.

The Economy U.S. in 2015

How has it been that with all the billions of dollars per month that the Fed has injected into the money supply, how come the economy has not responded? Even though the Fed had tapered their money stimulus, the Fed's balance sheet has increased to over 4 trillion dollars up from a half of a trillion just a few years ago. So if the Fed has supplied the economy with essentially 4 trillion dollars, where is the money?

Following the money trail the Fed prints the money out of thin air and then lends it to the U.S. Treasury. Then the U.S. Treasury supplies the banks with this money at close to zero interest rates. So at this point the Banks have the stimulus money. This money was put into circulation to help the economy grow through lending for homes, business, etc. But most of the homes today were purchased with cash. Corporations are sitting on a record amount of cash. They have done this because they do not want to repatriate it and pay the tax on it.

Loans are not being made because of lending policies. corporations are not needing the money for expansion. What they are borrowing money for is to fund their operations because they would rather pay a low-interest rate of about 3% than repatriate the money they have overseas and pay 40% in tax. So at the end of the day, the money that was printed to fuel the economy has not been used for its intention.

The banks that have the stimulus money have invested it. They are paying almost nothing in interest and in turn investing it aggressively. This will be dangerous for the taxpayer because these banks are too large to fail and if or when the stock bubble pops the U. S. government will have to bail them out to keep a banking system alive. However this time this bubble is so large that it may ruin the economy as a whole and as a result collapse the "system" including the dollar.

If the banks are not going to use the money that was put into circulation for its intention. Then the U.S. government has a fiduciary responsibility to stop issuing bonds for the Fed to purchase. The system should realize that increasing the Fed's balance sheet that already has over 4 trillion dollars of treasury notes has to stop. When is when? If the economy has not been stimulated after trillions of dollars of stimulus, more is not the solution. If the money stimulus is the answer, force the banks to lend it or if they will not, then they must send it back to the U.S. government so that they can repay the federal loans.