Major 2015 Tax Changes
In an article last December, we highlighted some tax changes for 2015 that were enacted in the Protecting Americans from Tax Hikes (PATH) Act, which included the renewal of key taxpayer-favorable benefits. Here are some other noteworthy changes for 2015 that you should be aware of:
Standard mileage rate. The standard mileage rates for the use of a car, van, pickup or panel truck are: 57.5¢ per mile for business miles driven in 2015 (up from 56¢ in 2014), 23¢ per mile driven for medical or moving purposes (down from 23.5¢ in 2014); and 14¢ per mile driven in service of charitable organizations.
Taxpayer identification number. Taxpayers, along with any of their qualifying children, must have a taxpayer identification number (TIN)—generally a Social Security number (SSN)—to claim the earned income tax credit, the child tax credit, and the American Opportunity Tax Credit. Further, to get these benefits on a 2015 return, the taxpayer must receive the number before the due date for filing a 2015 return (either April 18 or April 19, or for those who get an extension, Oct. 17).
IRA rollovers. Beginning in 2015, an IRA owner can make only one rollover from an IRA to another (or the same) IRA in any 12-month period, regardless of the number of IRAs he owns. The limit applies by combining all of an individual’s IRAs, including SEP and SIMPLE IRAs as well as traditional and Roth IRAs, effectively treating them as one IRA for purposes of the limit. But the IRA owner can continue to make unlimited trustee-to-trustee transfers between IRAs. Before 2015, the one-per-year limit applied on an IRA-by-IRA basis, that is, only to rollovers involving the same IRAs.
ABLE accounts. States can now offer specially designed, tax-favored ABLE (Achieving a Better Life Experience) accounts to people with disabilities who became disabled before age 26. Recognizing the special financial burdens faced by families raising children with disabilities, ABLE accounts are designed to enable people with disabilities and their families to save and pay for disability-related expenses. Contributions totaling up to the annual gift tax exclusion amount ($14,000 in 2015) can generally be made to an ABLE account each year. Though contributions are not deductible, distributions are tax-free if used to pay qualified disability expenses.
New retirement account available. Eligible taxpayers can now take advantage of a new starter retirement account available free from the Treasury Department through the MyRA program. Taxpayers can choose to fund a retirement account through payroll deductions, electronic transfers from a savings or checking account, or by choosing direct deposit for their federal income tax refund.
Health care provisions.
Many taxpayers will receive new year-end forms (including Form 1095-B and Form 1095-C) providing them with information about health coverage they had or were offered. While the information on these forms may assist in preparing a return, they are not required. Like last year, taxpayers can prepare and file their returns using other information about their health insurance.
The individual shared responsibility payment has increased from last year and will apply to taxpayers who did not have qualifying coverage or an exemption for each month during 2015. To determine whether an exemption is available or the payment applies, check out the special interactive tool available on IRS.gov. Like last year, most taxpayers will simply need to check a box on their tax return to indicate they had health coverage for all of 2015.
