for doing business with us in 2015.
There are several tax provisions that expired at the end of 2014 that, if extended retroactively to
January 1, 2015, would have an impact on the 2015 tax returns.
TAX PROVISIONS THAT EXPIRED AT END OF 2014
1. The itemized deduction for sales tax when it is larger than the state and local income taxes paid;
2. The $250 deduction for classroom supplies available to qualified educators;
3. The opportunity for taxpayers age 70 ½ or older to donate a maximum of $100,000 to a
charitable organization from their IRA account…this can be used to satisfy their “required
minimum distribution”;
4. The “before adjusted gross income” deduction for qualified tuition and fees paid to post
secondary educational institutions (maximum of $4,000);
5. The favorable 15 year depreciation for certain property improvements and new construction;
6. The 50% bonus depreciation available for new equipment purchased by a business;
7. The residential energy credit for individuals (life time limit of $500)
8. Business Equipment Expensing Election (Section 179) – A $25,000 expensing deduction is
available for new and used equipment purchased by businesses with tax years beginning 2015,
reduced from $500,000 in 2014.
TAX PROVISIONS CONTINUING IN 2015
Additional Medicare Tax on Earned Income – An additional .9% Medicare tax will be imposed on wages
and self-employment income in excess of $200,000 for single taxpayers and $250,000 for married
taxpayers filing a joint tax return. Employers are required to withhold this additional tax when an
individual’s income exceeds $200,000.
Medicare Tax on Unearned Income – a 3.8% Medicare tax will be imposed on the lesser of net
investment income (interest, dividends, royalties, and rents) or modified adjusted gross income in
excess of $200,000 for single taxpayers and $250,000 for married couples filing a joint tax return.
Itemized Deductions for Medical Expenses – The threshold to claim an itemized deduction for medical
expenses has increased from 7.5% to 10%. Therefore, only those medical expenses in excess of 10% of a
taxpayer’s adjusted gross income will be allowed as an itemized deduction. For taxpayers age 65 and
older, this provision is postponed until 2017.
Health Flexible Spending Account Limit – Salary reductions for health flexible spending arrangements
within cafeteria plans will now be limited to $2,550.
DEVELOPMENTS FOR 2016
For tax years beginning after December 31, 2015, Partnership and S Corporations must file their tax
returns by the 15th day of the third month after the end of the tax year. Thus, entities using a calendar
year will have to file by March 15 of the following year. This moves the filing deadline for Partnerships
forward one month.
C Corporations must file by the 15th day of the fourth month after the end of the tax year. Thus, C
Corporations using a calendar year must file by April 15 of the following year. This moves the filing
deadline for C Corporations back one month. A special rule will allow C Corporations with a June 30 year
end to delay this change until 2025.
ESTATES AND TRUSTS
The ordinary income tax rates for trusts and estates are unchanged except that the 35% tax bracket has
been increased to 39.6%.
The capital gains tax rates for trusts and estates have been changed permanently:
1. 0% for net long term capital gains subject to the 15% ordinary income tax rate;
2. 15% for the net long term capital gains subject to the 25%, 28%, and 33% ordinary income tax
rates;
3. 20% for the net long term capital gains subject to the 39.6% ordinary income tax rate.
Qualified dividends received in trusts and estates will continue to be taxed as long term capital gains.
The federal estate and gift tax maximum rate is 40%.
The federal estate and gift tax exemption has been increased to $5,430,000 and is indexed to inflation
for future years. The portability feature (surviving spouse is able to add any unused exemption of
deceased spouse to his/her exemption) has also been retained. These provisions are permanent.
AFFORDABLE CARE ACT
The individual requirement for minimum essential coverage remains in effect. Health insurance can be
employee-sponsored, coverage through the state or federal exchanges, Medicare, Medicaid, or other
qualified plans. Insurance coverage must be in place each month of the year to avoid penalties.
A premium assistance tax credit will be available for those families within 400% of the federal poverty
line for their family size AND purchased insurance through the Health Insurance Marketplace
(Exchange).
Taxpayers receiving premium assistance through the Health Insurance Marketplace will receive a Form
1095-A detailing the coverage and credits received for 2015. Any credits received will be subject to
recapture if the taxpayers income is higher than estimated on the application for premium assistance
submitted upon entering the marketplace.
REVIEW OF MICHIGAN INCOME TAX
All non-refundable credits are gone.
Michigan Homestead Property Tax Credit – No credit is available if the taxable value of the homestead is
greater than $135,000 or if the “household resources” (all taxable and non taxable income with a
deduction for insurance premiums paid, but no deductions for business or rental losses) is $50,000 or
more (credit is reduced prorata for household income between $41,000 and $50,000). The credit for
seniors and disabled taxpayers is reduced by 4% for each $1,000 of household resources in excess of
$21,000 (maximum reduction of 40% for household resources of $30,000 or more).
Retirement Income – The taxation of retirement income now depends on the year that you were born
(for married couples the birth date of the oldest spouse is used):
1. For taxpayers born before 1946, no changes were implemented...single taxpayers are allowed to
exclude over $47,000 in 2015 and married couples filing jointly were allowed to exclude over
$94,000. These amounts are indexed to inflation.
2. For taxpayers born from 1946 through 1952, the exemption for pension income will be $20,000
for single taxpayers and $40,000 for a joint return until the taxpayer reaches 67 years of age.
After age 66, the $20,000/$40,000 exemption applies to all income. Regardless of age, the
exemption is eliminated if household income exceeds $75,000 for single taxpayers and $150,000
for a joint return.
3. For taxpayers born after 1952, the exemption for pensions is eliminated until age 67. After age
66, an exemption of $20,000 for single taxpayers and $40,000 for joint tax returns applies to all
income, including social security income. Taxpayers will have the option of exempting all of the
federal taxable social security income instead of the $20,000/$40,000 exemption. If the
$20,000/$40,000 exemption is used, the taxpayer will not be able to use the social security
exemption or the standard personal exemption. The $20,000/$40,000 exemption will be
eliminated if household income exceeds $75,000 for single taxpayers and $150,000 for joint tax
returns.
4. The deduction for dividends, interest, and capital gains is now available for individuals age 67
and older (was age 65). The deduction is limited to about $10,000 for single taxpayers and
$20,000 for joint tax returns and is indexed for inflation.
2015 TAX TABLES
SINGLE
TAX
MARRIED
RATE
FILING JOINTLY
FIRST
9,225
10%
FIRST
18,450
NEXT
28,225
15%
NEXT
56,450
NEXT
53,300
25%
NEXT
76,300
NEXT
98,550
28%
NEXT
79,250
NEXT
222,200
33%
NEXT
181,050
NEXT
1,700
35%
NEXT
53,350
OVER
413,200
39.6%
OVER
464,850
MARRIED
TAX
HEAD OF
FILING SEPARATELY
RATE
HOUSEHOLD
FIRST
9,225
10%
FIRST
13,150
NEXT
28,225
15%
NEXT
37,050
NEXT
38,150
25%
NEXT
79,400
NEXT
39,625
28%
NEXT
80,250
NEXT
90,525
33%
NEXT
201,650
NEXT
26,675
35%
NEXT
27,500
OVER
232,425
39.6%
OVER
439,000