Top Five Tax Questions for 2015
As the ides of April loom closer, taxpayers traditionally have lots of questions. These questions have grown more complex thanks to the implementation of the Affordable Care Act (ACA) in 2014 and the reduction in funding for the IRS.
What does this mean to you? Here are five common questions being asked by taxpayers this year:
- Q: How will I be affected by the ACA?
A: Most taxpayers won’t see much of a change in their return filing process or their refund amount because of the ACA. If you enjoy employer-paid health insurance benefits and your spouse and children are on the same employer-sponsored plan, you’ll likely see little change. If any of the following applied to your situation in 2014, however, you might want to consult a tax advisor:
- You were self-employed
- You had no insurance
- You were covered by Medicare Part D alone (and not Part A, B, or C).
- You had Medicaid or had at least one child enrolled in the Children’s Health Insurance Program (CHIP)
- You paid for your own insurance (and/or that of your family)
- You had insurance through a state or federal marketplace
- Q: Do my children qualify for the Child Tax Credit?
A: Generally speaking, your child must be under the age of 19 or be a student under the age of 24 to qualify for the Child Tax Credit. Your child also must meet other guidelines outlined by the IRS, including requirements related to relationship, support, citizenship, and residency.
- Q: Should I itemize or take the standard deduction?
A: While each situation is unique, it helps to know the basic standard deduction amounts for tax year 2014 (these amounts can be higher if you are 65 or older):
- $6,200 for single taxpayers
- $9,100 for head of household taxpayers
- $12,400 for married taxpayers filing a joint return
- $6,200 for married taxpayers filing separately
Your best bet is to use these standard deduction amounts as a baseline and see if you surpass them by itemizing. It may seem easier with all the tax law changes this year to simply take the standard deduction, but in some cases these changes can actually elevate the number of itemized deductions you can take. If you’re not sure or confused, seek the help of a CPA.
- Q: Does the Alternative Minimum Tax (AMT) apply to me?
A: The AMT was introduced in 1969 to ensure wealthy taxpayers don’t use loopholes to avoid paying taxes altogether. An AMT exemption is extended to those whose income is below a certain amount. The 2014 AMT exemption amounts for each filing status are as follows:
- $52,800 for single taxpayers
- $52,800 for head of household taxpayers
- $82,100 for married taxpayers filing a joint return
- $41,050 for married taxpayers filing separately
- Q: How can I track my tax return progress and refund status?
A: Calling the IRS this year might not be the best idea. Funding cuts have created longer wait times and delays. The good news is it is now much easier to use the Internet to get answers to most common questions. If you filed electronically, you can start checking on the status of your tax return online within 24 hours. If you filed a paper return, you can begin checking your status through the IRS website within four weeks. You won’t receive a refund date right away (if you are owed one), but you will be able to watch your return go through three stages: Return received, Return approved, and Refund Sent. The IRS has an excellent mobile application–called IRS2Go–to track your return status, or you can track your refund status from a web browser using the IRS tool Where’s My Refund?