Income Tax 2014
2014 Federal Individual Income Tax Rates, Deductions and Exemptions
Tax return due: Wednesday April 15, 2015, unless you file an extension with form 4868 October 15, 2015.
You have to pay federal income tax and on top of that state and local income tax in most states. Your tax bracket depends upon your income and your tax-filing classification.
There are seven federal income tax brackets (ranging from 10% to 39.6%), the brackets per state vary. There are five classifications: Single, Married Filing Jointly, Qualified Widow or Widower, Married Filing Separately, and Head of Household.
Jointly or qualifying widow(er)
|10%||$0 - $9,075||$0 - $18,150||$0 - $9,075||$0 - $12,950|
|15%||$9,076 - $36,900||$18,151 - $73,800||$9,076 - $36,900||$12,951 - $49,400|
|25%||$36,901 - $89,350||$73,801 - 148,850||$36,901 - $74,425||$49,401 - 127,550|
|28%||$89,351 - $186,350||$148,851 - $226,850||$74,426 - $113,425||$127,551 - $206,600|
|33%||$186,351 - $405,100||$226,851 - $405,100||$113,426 - $202,550||$206,601 - $405,100|
|35%||$405,101 -$406,750||$405,101 - $457,600||$202,551 - $228.800||$405,101 - $432,200|
|39.6%||$406,751 and more||$457,601 and more||$228,801 and more||$432,201 and more|
2014 Exemptions: for yourself (personal exemption), spouse (if you are married) or your dependents: $3,950 per person
The personal exemption is not a subject to federal income tax, but it is the minimal amount of money you need to get by at a subsistence level.
|Deductions||Single||Married Filing jointly ||Married Filing Separately||Head of Household||Dependents|
|Standard||$6,200||$12,400||$6,200||$9,100||$1000 or sum of $350 and dependent's earned income, not to exceed the standard deduction for the dependent's filing status.|
How does it work?
Individual tax payers are allowed a choice when preparing their income tax returns. They can itemize their deductions from a list of allowable items and subtract those itemized deductions and their personal exemption deductions from their AGI to get their Taxable Income. Or they can choose to subtract the standard deduction and their personal exemptions. The choice between standard and itemized deduction depends on:
- a comparison between both types of deductions: what choice gives more money to subtract?
- do you have kept records of the items you want to subtract? - you need them as prove.
- if you are filing as 'Married', Filing separately', and your spouse itemizes, you have to do that to.
Option Standard Deduction and Personal Exemptions
Example 1: a single without children pays income tax above a filing threshold of $10,150. This threshold is the Standard Deduction of $6,200 plus the Personal Exemption of $3,950. So, a single would actually pay 0% over the first $10,150 of income. After subtracting this amount from her or his income, the tax brackets start to work. Over the next $9,075 a single pays 10% tax; 15% over the amount between 9,076 and $36,900 and so on.
Example 2: For a head of household with one dependent child it would be the standard deduction of $9,100 + the Personal Exemption of $3,950 + the Personal Exemption of a Dependent child of $3,950 = a threshold of $17,000.
Example 3: A head of household with one dependent child and one dependent elderly has a threshold of the Standard Deduction of $9,100 + the Personal Exemption of $3,950 + the Personal Exemption for the Dependent Child of $3,950 + the Dependent Elderly of $1,550 = a threshold of $ 18,550.
You can take an exemption for yourself - the personal exemption - or for your dependents, but you cannot do that if you can be claimed as a dependent by another taxpayer - even if this taxpayer doesn't actually claim you as a dependent. If you are married you can claim an exemption for your spouse filing Jointly or Separately - only if another taxpayer doesn't claim your spouse as a dependent. You cannot claim a person dependent unless that person is your Qualifying Child or qualifying relative.
You must always list the social security number (SSN) of any dependent for whom you claim an exemption. If you don't list the SSN the exemption could be denied.
Threshold, so you must file
when your Gross Income Exceeds
|65 or older||$11,700|
|Head Household||Under 65||$13,050|
|65 or older||$14,600|
|Married Filing Jointly||Under 65 both spouses||$20,300|
|65 or older one spouse||$21,500|
|65 or older both spouses||$22,700|
|Married Filing Separately||any age||$3,950|
Qualifying Widow(er) with
|65 or older||$17,550|
Threshold with number of Blind/Elderly Exemptions
|Married Filing jointly |
|Head of |
|0 exemptions blind/elderly||$10,150||$20,300||$13,050|
|1 exemption bind/elderly||11,700||$21,500||
|2 exemptions blind/elderly||13,250||$22,400||$16,850|
Personal Exemption Phaseout (PEP)
Personal exemptions used to be subject to phase-out limits, called the personal exemption phaseout (PEP). The phase-out limits didn't apply for the year 2010, 2011 and 2012. The limitations re-surfaced in 2013:
|Filing status||AGI Beginning Phaseout||AGI Completed Phaseout|
|Married filing jointly||$305,050||$427,550|
|Married filing separately||$152,525||$213,775|
|Head of Household||$279,650||$402,150|
Earned Income Credit (EITC):
|Childless||1 child||2 children||3 or more children|
|Earned Income Single/Married filing jointly||$6,480||$9,720||$13,650||$13,650|
|Max credit Single/Married filing jointly||$496||3,305||$5,460||$6,143|
|Phaseout (single)||$8,110 -$14,590||$17,830 - $38,511||$17,830 - $43,756||$17,830 - $46,997|
|Phaseout (married filing jointly)||$13,540 - $20,020||$23,260 - $43,941||$23,260 - $49,186||$23,260 - $52,427|
The limitation for itemized deductions - the Pease limitations, named after former Rep. Don Pease - will begin with incomes of $254,200 or more ($305,050 for married couples filing jointly).
Adoption Credit: the maximum credit is $13,190. Phaseouts apply for taxpayers with a modified adjusted gross income over $197,880. The credit is completely phased out with a adjusted gross income of more than $237,880.
Alternative Minimum Tax (AMT): The AMT thresholds 2014 are $80,000 for married taxpayers filing jointly, $52,800 for single taxpayers and $82,100 for married couples filing jointly.
American Opportunity Credit: limited to $2,500. Phaseouts apply for the credit beginning with a modified adjusted gross income over $90,000 ($180,000 for married couples filing jointly). Available only for 4 tax years per eligible student and only if that student had not completed the first 4 years of postsecondary education before 2013.
Child Tax Credit: The value used to determine the amount of refundable credit is $3,000 (unchanged).
Flexible Spending Accounts: limit on employee contributions to employer-sponsored healthcare flexible spending accounts (FSA) remains at $2,500.
Hope Scholarship Credit: limited to $2,500. The amount to claim is equal to 100% of qualified tuition and related expenses not in excess of $2,000 plus 25% of those expenses in excess of $2,000 but not to exceed $4,000.
Kiddie Tax: the threshold remains at $1000.