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With contributions from Eric Evans

It’s a given. Each new year brings changes in federal tax limits, deductions and, often, rates.

For 2014, U.S. taxpayers face significant increases in maximum federal tax rates for capital gains and dividend income. There are also changes in the standard deduction and personal exemption amounts, as well as the Social Security taxable wage base, mileage deductions, and business equipment deductions, to name just a few.

Knowing the new amounts can be crucial to your tax and transaction planning for the coming year.

Quick Reference Guide for 2014 Federal Taxes
The following guide includes many of the most important federal tax amounts for 2014, and compares them to the amounts currently applicable for 2013.

 

Social Security and Medicare  2014 2013
Social Security taxable wage base $117,000 $113,700
Social Security tax

Employee

Self-employed

 

6.2%

12.4%

 

6.2%

12.4%

Medicare taxable wage base No limit No limit
Medicare tax

Employee

Self-employed

 

1.45%

2.9%

 

1.45%

2.9%

Medicare surtax  (generally on net investment income of married couples with modified AGI > $250,000; $200,000 for single persons) 3.8%

 

 

3.8%
Individual Retirement Accounts 2014 2013
Individual IRA, up to 100% of earned income (combined limit for traditional and/or Roth) $5,500 $5,500
Additional annual catch-up contributions for account owners age 50 and older (Roth and traditional IRA) $1,000 $1,000
Annual Qualified Plan Limits 2014 2013
Maximum compensation used to determine contributions $260,000 $255,000
Deferral limits for plans

§401(k) and §403(b)

SIMPLE

§457

 

$17,500

$12,000

$17,500

 

$17,500

$12,000

$17,500

Additional catch-up contributions for employees, age 50 and older

§401(k) and  §403(b)

SIMPLE

§457

 

 

$5,500

$2,500

$5,500

 

 

$5,500

$2,500

$5,500

Highly Compensated Employee threshold $115,000 $115,000
Compensation defining Key Employee in top-heavy plan $170,000 $165,000
Compensation triggering Simplified Employee Pension (SEP) contribution requirement $550 $550
Maximum annual addition for Defined Contribution Plan $52,000 $51,000
Maximum annual benefit for Defined Benefit Plan $210,000 $205,000
Federal Tax Rates 2014 2013
Maximum individual income tax rate 39.6% 39.6%
Taxable income beyond which top rate begins

Married filing jointly and surviving spouse

Single

Head of household

Married filing separately

 

$457,600

$406,750

$432,200

$228,800

 

$450,000

$400,000

$425,000

$225,000

Maximum rate for qualified capital gains and dividends 20% 20%
Hospital insurance tax (on income > $250,000 for married couples and $200,000 for single persons) 0.9% 0.9%
Standard Deduction 2014 2013
Married filing jointly and surviving spouse $12,400 $12,200
Single and married filing separately $6,200 $6,100
Head of household $9,100 $8,700
AMT Exemption Amounts 2014 2013
Married filing jointly and surviving spouse

 

$82,100 less
25% of AMT income
> $156,500
$80,800 less
25% of AMT income> $153,900
Single

 

$52,800 less
25% of AMT income
> $117,300
$51,900 less
25% of AMT income > $115,400
Married filing separately

 

$41.050 less
25% of AMT income
> $78,250
$40,400 less
25% of AMT income
$76,950
Personal Exemption 2014 2013
Amount $3,950 $3,900
Personal Exemption + Itemized Deduction Phase-Out 2014 2013
Phase-out begins (adjusted gross income)

Married filing jointly and surviving spouse

Single

Head of household

Married filing separately

 

$305,050

$254,200

$279,650

$152,525

 

$300,000

$250,000

$275,000

$150,000

Driving Deductions, Per Mile 2014 2013
Business mileage 56.0¢ 56.5¢
Charitable mileage 14.0¢ 14.0¢
Medical and moving mileage 23.5¢ 24.0¢
Business Equipment 2014 2013
Maximum Section 179 expense deduction $25,000 $500,000
Phase-Out for Section 179, based on asset additions $200,000 $2 million
Qualified Transportation Fringe Benefit Exclusion 2014 2013
Commuter highway vehicle and transit pass, per month $130 $245
Qualified parking, per month $250 $245
Domestic Employees 2014 2013
Annual threshold when a domestic employer is liable to withhold and pay FICA for babysitters, housekeepers, etc. $1,900 $1,800
Kiddie Tax 2014 2013
For an under-age-19 child (or a full-time student under the age of 24), the net unearned income that is not subject to “kiddie tax” $2,000 $2,000
Federal Estate Tax 2014 2013
Maximum tax rate 40% 40%
Exemption amount, per decedent $5.34 million $5.25 million
Gift Tax 2014 2013
Annual amount, per recipient (without filing a gift tax return or reducing the lifetime gifting exemption amount) $14,000 $13,000
Lifetime gifting exemption $5.34 million $5.25 million
Exclusions, Deductions and Credits 2014 2013
Exclusion of gain on certain small business stock 50% 100%
Foreign income exclusion $99,200 $97,600
Bonus first-year depreciation N/A 50%
Major Expiring Provisions    
State and local sales tax deduction

Expires 12.31.2013

Deduction for elementary and secondary educator expenses

Expires 12.31.2013

Deduction for higher education expenses

Expires 12.31.2013

Nontaxable IRA distributions to certain charities

 Expires 12.31.2013

Increase in mass transit and parking benefits Expires 12.31.2013
Exclusion of forgiven debt on qualified principal residence Expires 12.31.2013
Research credit Expires 12.31.2013
Bonus first-year depreciation Expires 12.31.2013
15-year write-off for qualified leasehold and retail improvements and restaurant property Expires 12.31.2013
Work opportunity tax credit Expires 12.31.2013
American opportunity education credit Expires 12.31.2017
New markets tax credit Expires 12.31.2013
Energy-efficient home credit Expires 12.31.2013
Nonbusiness energy property credit Expires 12.31.2013
Energy-efficient appliances credit Expires 12.31.2013
Biodiesel fuels credit Expires 12.31.2013

 

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