What’s New

For Homeowner: Mortgage insurance premiums- If you pay mortgage insurance premiums, also known as private mortgage insurance (PMI), you may not be able to deduct the premiums as mortgage interest in 2014. Forgiven debt: The canceled debit exclusion provides tax relief on canceled debt for many homeowners involved in the mortgage foreclosure crisis. You may exclude up to $2,000,000 ($1,000,000 if married filing separately) of canceled qualified principal residence indebtedness from taxable income.

Home office deduction: Beginning in tax year 2013 (returns filed in 2014), taxpayers may use a simplified option when figuring the deduction for business use of their home.  Note: This simplified option does not change the criteria for who may claim a home office deduction. It merely simplifies the calculation and recordkeeping requirements of the allowable deduction

Standard mileage rate: For 2015: The standard mileage rates for the use of your car or other vehicle is 57.5 cents per mile for business, 23 cents per mile driven for medical or moving purposes and 14 cents per mile for charitable travel which is the same as 2014. For 2016: The standard mileage rates for the use of your car or other vehicle is 54 cents per mile for business, 19 cents per mile driven for medical or moving purposes and 14 cents per mile for charitable travel which is the same as 2015.

Contribution limits for flexible spending accounts: The most you can contribute to one of these plans remains at $2,550. Your spouse can also contribute $2,550 if he or she meets the qualifications. For certain FSAs, up to $500 can now be carried over to the next year

Retirement Plan Contribution Limit: For 2015 and 2016, your total contributions to all of your traditional and Roth IRAs cannot be more than $5,500 ($6,500 if you’re age 50 or older), or your taxable compensation for the year, if your compensation was less than this dollar limit. The limit on employee elective deferrals (401(k) ) is: $18,000 ($24,000 if you’re age 50 or older) in 2015 and 2016 (the $18,000 amount may be increased in future years for cost-of-living adjustments). Contributions an employer can make to an employee’s SEP-IRA cannot exceed the lesser of 25% of the employee’s compensation, or $53,000 for 2015 and 2016. For 2015 IRA and Roth IRA Deduction Limits – Effect of Modified AGI on Deduction, please refer to http://clotax.com/individuals/third/194-2/

Continued….