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We are sending you this newsletter to inform you of some of the changes that are important to know about as we approach the end of the tax year. In this issue we will highlight the updated 2014 tax brackets & other limitations, the Section 179 deduction, and the state unemployment taxable wage base.
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2014 Tax Planning
Tax planning continues to be a complicated and critical task. While we do not have room to cover all of the new tax laws in this newsletter, we would like to assist you with tax saving strategies that apply to your business or individual return. Now is the time to start thinking about taxes and the ways to minimize your liability. This allows time before the end of the year to implement any changes that need to be made. By January, it will be too late. Please contact our office if you are interested in a tax projection to help minimize your tax liability for 2014 and beyond.
2014 Income Tax Bracket
Listed below are the updated income tax brackets, which show the tax rates for the applicable ranges of income for each filing status.
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2014 Tax Bracket
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Rate
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Single Filers
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Head of Household Filers
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Married Filing Jointly or Qualifying Widow/Widower
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Married Filing Separately
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10%
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$0 to $9,075
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$0 to $12,950
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$0 to $18,150
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$0 to $9,075
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15%
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$9,076 to $36,900
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$12,951 to $49,400
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$18,151 to $73,800
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$9,076 to $36,900
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25%
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$36,901 to $89,350
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$49,401 to $127,550
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$73,801 to $148,850
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$36,901 to $74,425
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28%
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$89,351 to $186,350
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$127,551 to $206,600
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$148,851 to 226,850
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$74,426 to $113,425
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33%
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$186,351 to $405,100
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$206,601 to $405,100
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$226,851 to $405,100
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$113,426 to $202,550
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35%
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$405,101 to $406,750
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$405,101 to $432,200
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$405,101 to $457,600
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$202,551 to $228,800
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39.6%
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$706,751 +
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$432,201 +
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$457,601 +
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$228,801 +
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2014 Credit AGI Limitations
There are many credits that are available to qualifying taxpayers. However, most are subject to phase-outs once Adjusted Gross Income reaches a certain threshold. Listed below are some of the more common tax credits available and the corresponding AGI phase-outs for each.
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2014 Credit AGI Limitations
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Single Filers
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Head of Household Filers
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Married Filing Jointly or Qualifying Widow/Widower
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Married Filing Separately
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Child Tax Credit = $1,000 (per child)
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$75,000
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$75,000
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$110,000
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$55,000
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Adoption Credit = $13,190
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$197,880
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$197,800
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$197,880
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$197,880
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Hope Scholarship/American Opportunity = $2,500
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$80,000
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$80,000
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$160,000
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$ -
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Lifetime Learning Credit $2,000
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$54,000
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$54,000
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$108,000
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$ -
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2014 Standard Deduction
Listed below are the standard deductions for each filing status. Like tax credits, the standard deduction is subject to a phase-out once Adjusted Gross Income reaches a certain threshold.
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Standard Deduction
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2014 Phase-out begins
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Single Filers
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$6,200
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$254,200
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Head of Household Filers
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$9,100
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$279,650
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Married Filing Jointly or Qualifying Widow/Widower
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$12,400
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$305,050
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Married Filing Separately
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$6,200
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$152,525
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 Section 179 Limits
The Section 179 deduction allows for the immediate write-off of certain
qualified assets. For the previous several years leading up to and including 2013, the maximum Section 179 deduction was increased to $500,000.
The immediate "expensing" of capital assets was approved by Congress in an effort to help businesses through the recent economic downturn. However, as of this time Congress has not passed a bill to extend the $500,000 limit into 2014. The maximum deduction for 2014 will be $25,000 unless Congress enacts new legislation.
Please note that this will have a significant effect on your tax liability if your business purchases more than $25,000 of assets in 2014. While we anticipate that Congress will pass an extension on the increased deduction limit, nothing is finalized as of right now. If you have any questions or concerns regarding the Section 179 deduction and how it may affect your tax situation, please contact our office.
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 State Unemployment Tax
State unemployment tax is paid by an employer and is based on the
employee's wages. Although all wages for covered employees must be reported to the state of Colorado, only wages up to a certain amount are actually taxable for purposes of unemployment. This amount, the taxable wage base, is $11,700 for 2014 and is set to increase to $11,800 for 2015.
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Please feel free to contact us with any questions you may have regarding the information above, or if there is another way we can serve you.
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