Except for the hubbub over the Tax Extenders bill being passed by Congress, the biggest news concerning taxes turned out to be a story on a parody website claiming refunds would be delayed until Oct. 15. That didn’t stop the social media universe from obsessing over the idea that the Obama administration would do such a thing in an effort to save millions of dollars. The rumor was so persistent that a Forbes writer felt the need to debunk it.
The real changes to the tax code for 2015 are mostly incremental and were set by Congress as indexing to inflation. Even past nightmares like annual political wrangling over the Alternative Minimum Tax have at least been stabilized.
There are some changes that taxpayers and their advisors should be aware of, said Bernard Kiely, of Kiely Capital Management, based in Morristown, N.J. One concerns withdrawing money from one IRA to roll it into another.
“The IRS clarified a rule this year,” Kiely said. “After losing a court decision, they made a rule that a withdrawal could be made from only one account per year.”
The idea, Kiely said, was to ensure that people wouldn’t remove money earmarked for retirement from multiple accounts — a practice that, as Michael Kitces pointed out, could be abused by account holders needing a free, short-term loan.
Kiely advised that a trustee-to-trustee transfer be used instead of a 60-day IRA rollover. That sort of transfer can be done for multiple accounts in the same tax year.
For Kiely, the biggest change involves a program the IRS put in to certify tax preparers. Those who don’t complete 18 hours of continuing education each year won’t be allowed to represent clients at audits.
“There are too many people out there preparing taxes who don’t know what they are doing,” Kiely said, adding that the voluntary program is a good idea.
Here’s a rundown of 6 top tax changes for 2015.
1. Alternative Minimum Tax
This exemption amount rises this year to $53,600 (up $800) for singles and $83,400 (up $1,300) for married couples filing jointly.
There was a time when fear of the expiration of this tax sent shockwaves through many taxpayers. Congress would delay and delay fixing it (doesn’t that sound familiar?) But now that it is indexed to inflation, the worry has been removed.