Linthicum Shipley Improvement Association Inc

Linthicum-Shipley Improvement Association

The Linthicum-Shipley Improvement Association is a voluntary-membership, non-profit organization dedicated to preserving the quality of life in Linthicum, Md. The LSIA has been watching over Linthicum since 1975. The organization was formed with the merging of the Linthicum Civic Association, which dated back into the 1950s, and the Shipley Improvement Association, which was formed in the early 1970s.

Year End Tax Prep

Year End Tax Planning for 2015

As the end of the 2015 tax year approaches, everyone should set aside some time to evaluate your situation and consider potential opportunities.  Good yearend tax planning depends on a good understanding of both your current circumstances and how those circumstances might change next year.

Consider whether there’s an opportunity to defer income to 2016.  When you defer income into 2016, you postpone payment of tax on that income.  This is especially true if you know you will have less taxable income in 2016.

You should also look for potential ways to accelerate 2016 deductions into the 2015 tax year.  If you itemize deductions on Schedule A of Form 1040 you should consider accelerating deductible expenses such as medical expenses, qualifying interest and state and local taxes.  Where this really works, if you think you will owe state taxes for 2015, make an estimated payment prior to the end of the year so it can be claimed as a deduction on your 2015 federal return.  If you make charitable contributions, you should consider accelerating 2016 contributions into 2015.

Depending on your circumstances, you might also consider taking the opposite approach.   If you think you will have higher income in 2016, you might want to look for ways to accelerate income into 2015 and possibly defer deductions until 2016 when they could potentially be more valuable.

Deductible contributions to a traditional IRA and pretax contributions to an employer-sponsored retirement plan such as a 401(k) could reduce your 2015 taxable income.  You should note that there are a number of factors that determine whether you’re eligible deduct contributions to a traditional IRA.  Contributions to a Roth IRA (assuming you meet the income requirement) or a Roth 401(k) plan are made with after-tax dollars (so there is no immediate tax savings) but qualified distributions are completely free of federal income tax.

For 2015, you’re generally able to contribute up to $18,000 to a 401(k) plan ($24,000 if you’re age 50 or older) and up to $5,500 to a traditional or Roth IRA ($6,500 if you’re age 50 or older).  The window to make 2015 contributions to an employer plan generally closes at the end of the year, while you typically have until the due date of your federal income tax return to make 2015 IRA contributions.  Once you reach 70 ½ you generally must start taking required minimum distributions (RMDs) from traditional IRAs and employer-sponsored retirement plans (an exception may apply if you’re still working and participating in an employer-sponsored plan).  Take any distributions by the date required, the end of the year.  The penalty for failing to do so is substantial, 50% of the amount that should have been distributed.

The Supreme Court has legalized same-sex marriage nationwide, significantly simplifying the federal and state income tax filing requirements for same-sex married couples.

A host of popular tax provisions expired at the end of 2014.  These items are commonly referred to as “tax extenders.  While it is possibly that some or all of these will be retroactively extended, currently they are not available for the 2015 tax year.  Among these provisions;  deducting state and local sales taxes in lieu of state and local income taxes; the above-the-line deduction for qualified higher-education expenses; qualified charitable distributions ; (QCDs) from IRAs; and increased business expense and “bonus” depreciation rules.

The individual mandate’s fine for going without health insurance is higher in 2015.  The tax is the greater of two amounts; the basic fine of $325 per family member ($162.50 for family members under 18) with a ceiling of $975 or an income-based levy of 2% of the excess household income over the tax return filing threshold.

Tax rates remain the same as 2014 while the standard deduction and personal exemption amounts have slight increases.

The Social Security wage base increased in 2015 to $118,500.  A person who turns 66 in 2015 can earn $41,880 without losing any benefits.  Persons between the ages of 62 and 66 can earn $15,720 before they lose any benefits.  There continues to be no earning cap once a beneficiary turns 66.

Mileage rates for 2015 are $.575 per mile for business travel, $.23 per mile for Medical travel and $.14 per mile for charitable driving.

Congress has passed tax revision laws at year end during the past several years so keep in mind and watch for another revision to extend several deductions again this year.

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