Do You Owe Taxes in 2015?
In this article, we'll explain the significant income tax changes in 2015. That discussion will include changes to federal income tax standard deductions and exemptions, mileage deduction rates, earned income credits, Hope and Lifetime Learning tax credits, in addition to changes to retirement accounts and Roth plans. This information applies to changes effective in 2015, which then become part of a taxpayer's return filed in 2016.
Federal Income Tax Filing Deadline
The filing deadline for the year 2015 is Friday April 15, 2016.
Income Tax Rates — the American Taxpayer Relief Act of 2012, or ATRA, added a seventh federal income tax bracket (39.6%) in 2013, while the remaining six rates were unchanged. In 2015, taxable incomes above the following thresholds now fall into the 39.6% bracket: Married Filing Separately ($232,425), Unmarried Individuals ($413,200), Head of Household ($439,000), and Married Filing Joint Returns ($464,850)
Capital Gains Tax
ATRA also made several important changes to the treatment of capital gains, and eliminated sunset provisions, adding stability and permanence to these rules:
Income Thresholds: individuals in the 10% and 15% tax brackets will pay 0% on eligible dividends and most capital gains.
Qualified Dividends: income received will be taxed at the same rate as long-term capital gains.
Tax Rate: individuals in the 25%, 33%, and 35% federal income tax brackets will pay 15% on capital gains, while taxpayers in the 39.6% bracket will pay 20%. Unmarried individuals (Single) with income over $200,000 and Married couples filing jointly with income over $250,000 will also pay a 3.8% Medicare surcharge tax on investment income; it increases the effective rate on capital gains to 23.8% (20% + 3.8%).
Standard Deductions —
The IRS says approximately two out of every three taxpayers claim the standard deduction. The 2015 change to the standard deduction for all individual taxpayers, is;
- Single (Unmarried Individuals): $6,300, an increase of $100
- Married Filing Separately: $6,300, an increase of $100
- Head of Household: $9,250, an increase of $150
- Married Taxpayers Filing Jointly and Qualifying Widow(er)s: $12,600, an increase of $200
- No Children: earnings must be less than $14,820, or $20,330 if Married Filing Jointly.
- 1 Child: earnings must be less than $39,131, or $44,651 if Married Filing Jointly.
- 2 Children: earnings must be less than $44,454, or $49,974 if Married Filing Jointly.
- 3 or More Children: earnings must be less than $47,747, or $53,267 if Married Filing Jointly.
Exemption Values —
The amount deducted for each exemption claimed in 2015 is $4,000, which is an increase of $50.
Increase to Earned Income Credit -
The earned income credit applies to working taxpayers that have income falling below certain thresholds. The qualification threshold depends on the number of persons in each family. The thresholds in 2015 are:
The tax credits themselves also increased in 2015 as well.
- No Children: $503; 1 Child: $3,359; 2 Children: $5,548; 3 or More Children: $6,242
New 2016 Minimum Wage Rates Added
Fourteen states have raised their Minimum Wage rates as of January 1st 2016.
New York's minimum wage is $9.00 per hour. This is greater than the Federal Minimum Wage. You are entitled to be paid the higher wage.
But note: The minimum wage is $9.00 per hour for most employees in New York, with exceptions for tipped employees, some student workers, and other exempt occupations.
Tipped wages may vary, depending on the amount of tips received per hour. The regular tipped wage rate of 7.50 increases to 7.65 with tips of at least 1.35 per hour and lowers to 6.80 with tips of at least 2.20 per hour. In 2013, New York's legislature approved a bill to raise the state minimum wage from $7.25 to $9.00 per hour over several years.
Current minimum wage rates for Fast Food Workers in New York State is $9.75 per hour and in New York City is $10.50 per hour. They have been increased on December 31, 2015, with regular increases in the state through 2021 and in New York City through 2018.
New York State Minimum Wage Laws - pre 2016
Minimum Wage Act (General Employment)
The General Industry Minimum Wage Act states that employers must pay all employees in New York State, including most domestic workers, at least $8.00 per hour.
Certain requirements set under regulations known as “wage orders” may modify the basic rate.
Wage orders are provisions of the minimum wage law that cover jobs in:
- The hospitality and building service industry
- Miscellaneous industries and occupations
- Farming
They set an hourly rate plus overtime and allowances in four General Industry Wage Orders, based on meals and lodging supplied by an employer. You can get these documents at the Forms and Publications link (see left-side navigation bar).
Some industries make allowances for tips; thus they set a lower hourly rate. For example, food service workers may earn $5.00 per hour because their total compensation includes expected tips.
When the worker must maintain required uniforms, certain allowances also apply.
Other service workers have a minimum rate of $5.65 per hour.
There are also allowances for meals and lodging supplied by an employer.
Guidance for the New York State Hospitality Industry on Uniforms
Minimum Wage Order for the Hospitality Industry
Summary of Minimum Wage Changes Contained in the Hospitality Wage Order
Full text of the Minimum Wage Order for the Building Service Industry
Summary of Wage Order Rates and Allowances for the Building Service Industry
Full text of the Minimum Wage Order for Miscellaneous Industries and Occupations
Summary of Wage Order Rates and Allowances for Miscellaneous Industries and Occupations
Full text of the Minimum Wage Order for Farm Workers
Full text of the Minimum Wage Order for Non-Profitmaking Institutions
