Every year, laws can change and affect your tax situation. Here are some examples:
- Inflation adjustments – Each year cost of living adjustments apply to tax brackets and various other numbers. For example, the dollar amount for a personal exemption rose from $3,900 on tax returns for 2013 to $3,950 on tax returns for 2014.
- Health care – Income tax returns for 2014 will have additional lines relating to the requirement to maintain health insurance. Depending on circumstances, you may be able to claim a credit or you may have to pay additional tax.
Tax year 2014 saw relatively few changes in the tax law of general interest. Here is a reminder of some significant changes that took effect in 2013:
- Income tax rates - For a number of years, the highest individual income tax rate was 35%. As of 2013, the 39.6% rate has been reinstated.
- Phase-outs - Also reinstated for 2013 are rules that phase out personal exemptions and itemized deductions, when income exceeds specific levels.
- Net investment income tax - A new 3.8% surtax on net investment income (including interest, dividends and capital gains) applies if overall income exceeds specified levels.
Talk to your tax advisor for more details.
Last updated on January 31, 2015