Another year has passed and we again take a moment to review a few tax numbers for the year 2014. One year has changed the financial status of many individuals. Large nest eggs have been greatly reduced, jobs have been lost and concern over one’s personal economic status has been brought to the forefront. Other clients have had a great financial year and will owe more income tax.
ANNUAL GIFTING and TUITION EXPENSES.
For those of you that are in your “advanced years,” gifting is a great way to lower your overall estate for future estate taxes while helping your children or grandchildren when they need the help. In 2014, a person can give up to $14,000 per person. If you are married your spouse may join in on the gift and double the amount. Over time, these annual gifts can greatly reduce an individual’s estate while providing tremendous value for children and grandchildren. There is no paper work involved and it is not a deduction for you or income to the person receiving the money. With the filing of a Federal gift tax return one can give away $5,340,000. In other words you can give to your family, charity or those in need an amazing amount of money.
A person may also give any amount for the medical needs or educational needs of a child or grandchild. Remember, you must make this payment directly to the financial institution, the medical facility or medical provider.
PERSONAL EXEMPTIONS AND DEDUCTIONS
The personal income tax exemption for each taxpayer and qualified dependent for 2014 is $3,950.00.
You are required to file an income tax return if your income is greater than the combination of the total of your reported standard deductions and your personal exemption. For 2014, a return is necessary for the following classes.
SINGLE or MARRIED FILING SEPARATELY: $9,075.00
MARRIED FILING JOINT: $18,150.00
HEAD OF HOUSHOLD: $12,950.00
STANDARD DEDUCTION AMOUNT TO AVOID ITEMAZATION.
SINGLE or FILING SEPARATELY: $6,200.00
MARRIED FILING JOINT: $12,400.00
HEAD OF HOUSEHOLD: $9,100.00
2014 MILEAGE RATES
You can deduct mileage for driving a vehicle for business, traveling for medical care, traveling for charity or relocating for a new job.
STANDARD BUSINESS MILEAGE RATE: 56 cents a mile.
MEDICAL CARE or MOVING PURPOSES (if itemizing): 23.5 cents a mile
CHARITY MILES DEDUCTION: 14 cents a mile
SALE OR PURCHASE OF PRINCIPAL RESIDENCE
Remember that the first $250,000 profit for a single taxpayer and $500,000 profit for a married couple is exempt from taxation on the sale of your principal residence that you have occupied for a period of at least two years. This is not new but there are some individuals who do not downsize because they are afraid of the tax consequences.
Happy Holidays and have a great New Year.
Jeffrey Roth is a Member along with Partner David Bacon and Associate Jessica Moon of the firm ROTH and BACON with offices in Port Clinton, Upper Sandusky and Marion, Ohio. Mr. Roth is also licensed and practices in Florida. His practice is limited to wealth strategy planning and elder law in both states. Nothing in this article is intended for, nor should be relied upon as individual legal advice. The purpose of this article is to help educate the public on concepts of law as they pertain to estate and business planning. Jeff Roth can be reached at firstname.lastname@example.org copyright@Jeffrey P. Roth 2014.