Recent Announcements


The Internal Revenue Service (IRS) has announced the annual inflation adjustments for a number of provisions for the year 2017, including tax rate schedules, tax tables, and cost-of-living adjustments for certain tax items.

These are the applicable numbers for the tax year 2017 - in other words, effective January 1, 2017. They are NOT the numbers and tax rates that you’ll use to prepare your 2016 tax returns in 2017 (you’ll find them here). Rather, these numbers and tax rates are those you’ll use to prepare your 2017 tax returns in 2018.

If you aren’t expecting any significant changes, you can use the updated tax tables to estimate your liability for the 2017 tax year. If, however, you are expecting to make more money, get married, buy a house, have a baby or other life change, you’ll want to consider adjusting your withholdingor tweaking your estimated tax payments.

Tax Brackets. The big news is, of course, the tax brackets and tax rates for 2017:

Single_2017MFJ_2017HOH 2017MFS_2017

You can compare these numbers against the 2016 brackets here.

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The standard deduction for single taxpayers and married couples filing separately is $6,350 in 2017, up from $6,300 in 2016; for married couples filing jointly, the standard deduction is $12,700, up $100 from the prior year; and for heads of households, the standard deduction is $9,350 for 2017, up from $9,300. The numbers look like this:


For 2017, the additional standard deduction amount for the aged or the blind is $1,250. The additional standard deduction amount is increased to $1,550 if the individual is also unmarried and not a surviving spouse.

For 2017, the standard deduction for a taxpayer who can be claimed as a dependent by another taxpayer cannot exceed the greater of (a) $1,050 or (b) $350 + the dependent’s earned income.

For those taxpayers who itemize their deductions, the Pease limitations, named after former Rep. Don Pease (D-OH) may cap or phase out certain deductions for high-income taxpayers. The Pease thresholds for 2017 are:


If the Pease limitations apply, the total of all your itemized deductions is reduced by the lesser of:

  • 3% of AGI above the applicable threshold; or
  • 80% of the amount of itemized deductions otherwise allowable for the tax year.

Pease limitations apply to charitable donations, the home mortgage interest deduction, state and local tax deductions and miscellaneous itemized deductions. They do not apply to medical expenses, investment expenses, gambling losses, and certain theft and casualty losses.

(You can read more about the Pease limitations and how they affect affluent taxpayers here.)

Keep in mind that the floor for medical expenses in 2017 is 10% of adjusted gross income (AGI) for all taxpayers. Taxpayers over the age of 65 could use the 7.5% floor through 2016: in 2017, the favored tax rate disappears and all taxpayers are subject to the 10% floor.

The personal exemption amount for 2017 is $4,050, the same as 2016. However, the exemption is subject to a phase-out that begins with adjusted gross incomes of $261,500 ($313,800 for married couples filing jointly). It phases out completely at $384,000 ($436,300 for married couples filing jointly). Phaseouts apply as follows:

PEP Phase

In years past, the AMT was subject to a last-minute scramble by Congress to “patch” the exemption but as part of the American Taxpayer Relief Act of 2012 (ATRA), the AMT exemption amounts are permanently adjusted for inflation – that’s why you now see it in this list. The AMT exemption amounts are as follows:


The kiddie tax applies to unearned income for children under the age of 19 and college students under the age of 24. For 2017, the threshold for the kiddie tax – meaning the amount of unearned net income that a child can take home without paying any federal income tax – is $1,050. All unearned income in excess of $2,100 is taxed at the parent’s tax rate.

Some tax credits are also adjusted for 2017. Some of the most common tax credits are:

  • Earned Income Tax Credit (EITC). For 2017, the maximum EITC amount available is $6,318 for taxpayers filing jointly who have 3 or more qualifying children. The revenue procedure has a table providing maximum credit amounts for other categories, income thresholds, and phase-outs.
  • Child & Dependent Care Credit. For 2017, the value used to determine the amount of credit that may be refundable is $3,000 (the credit amount has not changed). Keep in mind that this is the value of the expenses used to determine the credit and not the actual amount of the credit.
  • Adoption Credit. For 2017, the credit allowed for an adoption of a child with special needs is $13,570, and the maximum credit allowed for other adoptions is the amount of qualified adoption expenses up to $13,570. Phaseouts do apply beginning at taxpayers with modified adjusted gross income (MAGI) in excess of $203,540 and completely phased out for taxpayers with MAGI of $243,540 or more.
  • Hope Scholarship Credit. The Hope Scholarship Credit for 2017 will remain an amount equal to 100% of qualified tuition and related expenses not in excess of $2,000 plus 25% of those expenses in excess of $2,000 but not in excess of $4,000. That means that the maximum Hope Scholarship Credit allowable for 2017 is $2,500.
  • Lifetime Learning Credit. As with the Hope Scholarship Credit, income restrictions apply to the Lifetime Learning Credit. For 2017, the adjusted gross income amount used to determine the reduction in the Lifetime Learning Credit is $56,000 ($112,000 for joint filers).

Changes were also made to certain tax deductions, deferrals & exclusions for 2017. You’ll find some of the most common here:

  • Student Loan Interest Deduction. For 2017, the maximum amount that you can take as a deduction for interest paid on student loans remains at $2,500. Phaseouts apply for taxpayers with modified adjusted gross income (MAGI) in excess of $65,000 ($135,000 for joint returns) and is completely phased out for taxpayers with modified adjusted gross income (MAGI) of $80,000 or more ($165,000 or more for joint returns).
  • Foreign Earned Income Exclusion. For tax year 2017, the foreign earned income exclusion is $102,100, up from $101,300 for tax year 2016.
  • Transportation and Parking Benefits. For 2017, the monthly limitation for the qualified transportation fringe benefit is $255 for transportation in a commuter highway vehicle or any transit pass, as well as qualified parking.
  • Medical Savings Accounts. For 2017, the term “high deductible health plan” means, for participants who have self-only coverage in a Medical Savings Account, an annual deductible that is not less than $2,250 but not more than $3,350. For self-only coverage, the maximum out of pocket expense amount is $4,500. For 2017, the term “high deductible health plan” means, for participants with family coverage, an annual deductible that is not less than $4,500 but not more than $6,700. For family coverage, the maximum out of pocket expense is $8,250.

IRS computer problems shut down e-file system

posted Feb 4, 2016, 3:51 PM by Andre Lindley

 Melanie Eversley, USA TODAY7:39 a.m. EST February 4, 2016

The IRS reported a "hardware failure" Wednesday. There's no word yet on when the system will be up and running. Video provided by Newsy Newslook


(Photo: J. David Ake, AP)


The Internal Revenue Service suffered a "hardware failure" on Wednesday afternoon, which left many of its tax processing systems unavailable Wednesday night, the agency announced in a statement.

The agency stopped accepting electronically filed tax returns because of the problem. The outage could affect refunds, but the agency said it doesn't anticipate "major disruptions."

"The IRS is still assessing the scope of the outage," the agency said. "At this time, the IRS does not anticipate major refund disruptions; we continue to expect that nine out of 10 taxpayers will receive their refunds within 21 days."

The website remains available, but "Where's My Refund" and other services are not working.

Some systems will be out of service at least until Thursday, the agency said. "The IRS is currently in the process of making repairs and working to restore normal operations as soon as possible," the IRS said.

Taxpayers can continue to send electronic returns to companies that serve as middlemen between taxpayers and the IRS. But those companies have to hold on to the tax returns until the IRS systems are up and running again, the IRS said.

People who have already filed returns don't need to do anything more, the IRS said.

Protect Yourself from Tax Identity Theft

posted Jan 25, 2016, 1:53 PM by Andre Lindley


You might not be thinking about your 2015 tax return, but identity thieves are. Tax-related identity theft occurs when someone steals your Social Security number and files a tax return before you do to claim a fraudulent refund in your name. The rewards for these thieves are huge: According to a U.S. Government Accounting Office report, in 2013 (the most recent data available), the IRS paid $5.8 billion in refunds that were later determined to be fraudulent.

Tax-related ID theft is a stealthy crime. You might not be aware that you’ve been victimized until you e-file your return and discover that a return has already been filed using your Social Security number. Or you might send in your return and receive a letter from the IRS saying that a return was already filed for you.

To raise consumer awareness about the threat of tax identity theft, the Federal Trade Commission is holding Tax Identity Theft Awareness Week (January 25-29). The events listed below (all times are Eastern) are designed to help you understand the nature of the crime, minimize your risk of becoming a victim, and learn what to do if thieves have stolen your refund. The events include:

  • January 26, 2 p.m.: A Federal Trade Commission webinar explains how tax identity theft happens and what you can do if it happens to you. 
  • January 27, 11 a.m.: A Twitter chat shares information about tax identity theft for veterans. Join the conversation at #VeteranIDTheft.
  • January 28, 1 p.m.: The FTC and the IRS co-host a webinar with information to help victims of tax identity theft.
  • January 29, 2 p.m.: The FTC and the Identity Theft Resource Center co-host a Twitter chat about tax ID theft. Join the conversation at #IDTheftChat.

In addition, the FTC offers educational materials on the topic, available free of charge. The materials are published in English and Spanish. 

Avoiding Tax Scams

Fraud involving IRS impersonators spikes during tax season. Remember:

  • The IRS never asks for personal or financial information via email, text, or social media, and it will never contact you by phone to demand payment. Report suspicious email.
  • The agency will never ask for credit-card numbers over the phone, require payment without allowing you to question it or appeal, or threaten you with arrest for nonpayment.
  • Report fraud to the IRS by filling out this IRS form or calling 800-366-4484.

Getting Ready to File Your Tax Return: Health Coverage Reporting Requirement

posted Jan 20, 2016, 9:55 AM by Andre Lindley

It’s always a good idea to prepare early to file your federal income tax return. Like last year, certain provisions of the Affordable Care Act affect your federal income tax return when you file this year.


Here are two things you should know about the health care law’s coverage and reporting requirements that will help you get ready to file your tax return

  • The Affordable Care Act requires that you and each member of your family have qualifying health insurance coverage for each month of the year, qualify for an exemption from the coverage requirement, or makean individual shared responsibility payment when filing your federal income tax return.

  • Most taxpayers will simply check a box on their tax return to indicate that each member of their family had qualifying health coverage for the whole year. No further action is required. Use the chart on find out if your insurance counts as qualifying coverage. 

You or your tax professional should consider preparing and filing your tax return electronically. Using tax preparation software is the easiest way to file a complete and accurate tax return. There are a variety of electronic filing options, including free volunteer assistanceIRS Free File for taxpayers who qualify, commercial software, and professional assistance.


For more information about the Affordable Care Act and your 2015 income tax return, visit

Calculating an Individual Shared Responsibility Payment

posted Mar 6, 2015, 6:29 PM by Andre Lindley

The individual shared responsibility provision in the Affordable Care Act calls for you and your dependents to have qualifying health care coverage for each month of the year, qualify for a health coverage exemption, or make anIndividual Shared Responsibility Payment when filing your federal income tax return.

In general, the annual payment amount is the greater of a percentage of your household income or a flat dollar amount, but is capped at the national average premium for a bronze level health plan available through the Marketplace. You will owe 1/12th of the annual payment for each month you or your dependents don’t have either coverage or an exemption.

If you must make a payment, you can use the worksheets located in the instructions to Form 8965, Health Coverage Exemptions, to figure the shared responsibility payment amount due.

For more information about determining the amount and reporting your payment on your tax return, see our Calculating the Payment page.

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Top Five Reasons to E-file

posted Jan 25, 2015, 3:30 PM by Andre Lindley

Are you still using the old school method of doing your taxes? Do you still mail paper forms to the IRS? If so, make this the year you switch to a much faster and safer way of filing your taxes. Join the nearly 126 million taxpayers who used IRS e-file to file their taxes last year. Here are the top five reasons why you should file electronically too:

1. Accurate and easy.  IRS e-file is the best way to file an accurate tax return. The tax software that you use to e-file helps avoid mistakes by doing the math for you. It guides you every step of the way as you do your taxes. IRS e-file can also help with the new health care law tax provisions. The bottom line is that e-file is much easier than doing your taxes by hand and mailing paper tax forms. 

2. Convenient options.  You can buy commercial tax software to e-file or ask your tax preparer to e-file your tax return. You can also e-file through IRS Free File, the free tax preparation and e-file program available only on You may qualify to have your taxes filed through the IRS Volunteer Income Tax Assistance or Tax Counseling for the Elderly programs. In general, VITA offers free tax preparation and e-file if you earned $53,000 or less. TCE offers help primarily to people who are age 60 or older.

3. Safe and secure.  IRS e-file meets strict security guidelines. It uses secure encryption technology to protect your tax return. The IRS has safely and securely processed more than 1.3 billion e-filed tax returns from individuals since the program began.

4. Faster refunds.  In most cases you get your refund faster when you e-file. That’s because there is nothing to mail and your return is virtually free of mistakes. The fastest way to get your refund is to combine e-file with direct deposit into your bank account. The IRS issues most refunds in less than 21 days.

5. Payment flexibility.  If you owe taxes, you can e-file early and set up an automatic payment on any day until the April 15 due date. You can pay electronically from your bank account. You can also pay by check, money order, debit or credit card. Visit for more information.

5 Things That Can Stop You From Getting a Tax Refund

posted Jan 20, 2015, 2:00 PM by Andre Lindley

For the average person, a tax refund check can end up being the equivalent of around two paychecks (give or take). This amount of money can serve many purposes for the typical household: it can pay an extra mortgage payment or two, pay off a few credit cards, or it can be enough money to take that much-needed vacation.

What do you think?

But before you go packing your bags or making other plans for your check, you have to make sure you’re entitled to a refund first, and that nothing is standing in your way of receiving a check this tax season.

What do you think?

Although most taxpayers receive a refund, there are some things that can stop that from happening. Here are a few things that can stop you from receiving a refund this tax season.

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Learn How to Repay Student Loans.
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Source: Thinkstock

1. You (or your spouse) defaulted on student loans

Student loans are one of most common reasons that people have their tax refund checks offset. A default generally occurs after a borrower fails to make payments for 270 days, according to the Department of Education. Around 14% of borrowers default on their loans soon after they are scheduled to begin making payments.

What do you think?

Your joint return can also be intercepted for your spouse’s student loan debt. If only one spouse has a student loan debt (and only one spouse is legally responsible for that debt), you can fill out Form 8379, injured spouse allocation, and request to have only one spouse’s portion of the refund taken, as opposed to the entire refund.

2. You owe child support

What do you think?

According to the Office of Child Support Enforcement, federal refunds have been offset to pay past-due child support since 1982. “Since the program began in 1982 through the beginning of March 2013, more than $35 billion in past-due support was collected from 38 million intercepted tax refunds,” it explains.

What do you think?

As with student loans, if a spouse is not legally responsible for child support, that person may be able to collect his or her portion of the tax return by filling out an injured spouse allocation (From 8379). This, however, depends on individual state laws.

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3. You owe an IRS debt

If you were audited by the IRS or you have a debt from a prior tax year for any other reason, the IRS is more than likely going to collect the money you owe to it prior to issuing any refund.

What do you think?

Generally speaking, the more money involved, the higher your risk of audit. That is, a person with a $50,000-per-year income is less likely to be audited than someone earning $1 million per year. In any case, either taxpayer has a chance of being audited.

What do you think?

In some cases, a spouse (or former spouse) may be able to be relieved of the tax debt, interest, and penalties. A tax debt is different from other types of debts, like child support and student loan debts. With a tax debt, the spouse generally would not file for injured spouse relief but for a different type of relief, such as innocent spouse relief or separation of liability.

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4. Your income went up (or your tax situation changed)

What do you think?

If you made more money this tax year than you did last year, you may no longer be eligible for certain credits, like earned income tax credit (EITC), which is a refundable tax credit that results in large refunds for millions of taxpayers. According to the IRS, in 2013, more than 27 million taxpayers received a combined total of $65 billion in EITC.

What do you think?

An increase in income may also impact other tax benefits, like the premium tax credit. If you used the premium tax credit to lower the cost of your marketplace health insurance plan, and then your income increased throughout the year, you may even end up owing money because you are not entitled to as much tax credit as you received.

What do you think?

Even if your income didn’t change, your tax situation can change if you adjusted the amount of tax you paid throughout the year. For instance, an employee who adjusted withholding allowances to increase his or her paycheck — and underestimated the amount of tax that person needed to pay — may have to pay that money when it’s time to file.

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5. Someone stole your identity

Identity thieves will steal information that can provide them with some sort of financial benefit, and this may include stealing a Social Security number and filing a tax return using that false Social. In the Tampa Bay Times, one taxpayer discussed her experience with this situation, and she didn’t receive her refund until nearly six months after she initially filed.

What do you think?

According to the Tampa Bay Times, “The IRS identified more than 2.9 million incidents of identity theft in 2013 and has described identity theft as the No. 1 tax scam for 2014.”

What do you think?

The IRS has identity theft-related notices that it issues, such as these:

What do you think?
  • CP01:”We received the information that you provided and have verified your claim of identity theft. We have placed an identity theft indicator on your account.”
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  • CP01A: “This notice tells you about the Identity Protection Personal Identification Number (IP PIN) we sent you.”
    What do you think?
  • CP01S: “We received your Form 14039 or similar statement for your identity theft claim. We’ll contact you when we finish processing your case or if we need additional information.”
    What do you think?

If you think someone has stolen your identity, the IRS suggests you contact your local police, file a complaint with the FTC, place a fraud alert on your credit report, contact your creditors, and close any fraudulent accounts. Also, respond to any IRS notices, submit IRS Form 14039, “Identity Theft Affidavit,” and continue to send in your tax return (even if you send in a paper return).

Read more:

6 things to do in January to prepare for tax time

posted Jan 6, 2015, 3:50 PM by Andre Lindley

View photo


You will be facing a lot more documentation challenges this tax season, so it’s time to get started on your January to-do list.

Make a list of all the places from which you are expecting to receive documents.

Employers (W-2), customers (1099-MISC), merchant banking and PayPal (1099-K), investments (1099-INT and 1099-DIV), pension and IRA accounts (1099-R), sales or dispositions of real estate (1099S, 1099-A, 1099-COD, etc.), mortgage lenders (1098), state payments and refunds (1099-G), and so forth. Using last year’s tax file will give you a starting point. Make note of sources that you have closed out during the year. Though they may still issue reports for the few months’ worth of activities. Add the new income and expense sources to your list.

Note: If you had taxable gambling winnings, you would have received the W-2G form from the establishment on the spot. It will not be coming in the mail.

Did you move?

If you moved at any time last year, your employers, banks, etc. might have the wrong address for you. Send them updates this week — call them and fax or email the information so they get your correct address as soon as possible. One of the most common complaints gets is that people didn’t receive their W-2s and 1099s — because they moved and forgot to notify the relevant issuers.

As a business, do you need to issue a Form 1099-MISC to anyone?

If you don’t already have each vendor’s name, address and tax ID number (especially via a Form W-9), get on the ball and start collecting that information immediately. Beware: vendors and freelancers who were not planning to pay taxes on their earnings may get hostile when you ask for their tax ID numbers.

You need to send the 1099s to recipients by Jan. 31 — even though you may not have to file the forms with the IRS until March 31. The penalty starts at $100 for each late 1099-MISC you issue. You know how antsy your vendors, affiliates, and freelancers get when the forms arrive late.

In fact, establish a policy for 2015. Before issuing a check to any freelancer or service provider, have them provide you with a signed Form W-9. It will save you a lot of trouble — and fights — next January.

Get proof of your health insurance coverage.

And that of your family members. Along with this, you will need to know the income of all members of the household in order to compute the health care credit or penalty. You’ll find new lines on your Form 1040. Line 61 deals with the tax/penalty for not having health care coverage. Line 69 is for the additional tax credit from Form 8962. Wow! You must see this form. In addition to household income, it asks about your monthly health insurance payment, your monthly premium tax credits…and so much more. (You will want to read the instructions.) This is the most complicated form that the IRS has ever issued for individuals to fill out. And it’s still in draft form.

Note: Administration of this new program will overtask the IRS, which is understaffed and will thus be hard-pressed to verify the information you provide this year. Since there may be refunds involved, this is ripe for fraud. Expect the IRS to be slow in issuing these refunds, while they try to insure the filings are valid.

What’s your name?

Did you get married or divorced last year and change your name? Or did you simply change your name, officially, because you didn’t like your old name? Update your name on your Social Security record. Until you change the name on your Social Security card, use your previous name on your tax return. Don’t worry about the name on the W-2 or 1099 not matching the tax return.

Do you own rental real estate or a business that depreciates its assets?

There is a raft of new rules about depreciating vs. capitalizing property that takes effect for the 2014 tax returns. They are called uniform capitalization rules. What does that mean to you?

The good news:

If you have not claimed depreciation on assets, but should have, you will be able to catch up on all the lost depreciation at once. That could mean a generous tax deduction on your business or rental. For rentals with suspended losses, don’t worry, you won’t lose this additional deduction. This will simply increase the losses you will be able to use when you finally sell the building.

The bad news:

Practically everyone who is now, or should have been, depreciating anything will have to attach a Form 3115 to make an election (a declaration) that they will be opting into the IRS’s new capitalization rules. It’s complicated. Tax professionals, researchers and writers have been discussing this for over two years and we still have many open questions. Don’t tackle this alone. Having a tax professional work with you on this improves your chances of getting it right. If you still get it wrong, you can avoid the penalties because you tried to get professional guidance.

Worse news:

You see, you just might get audited over this change. Or not. In March 2014, before the IRS was hit with the Congressional budget cuts, they updated their audit guide on Capitalizing vs. Expensing Repairs.

The Form 3115 will have to be filed with the relevant 2014 tax return and sent in to a special IRS unit as well. It will require the taxpayer’s signature.

Is there any good news in the tax world for the month of January? Well, we’re expecting to see a lot of funny and exasperating antics from taxpayers, celebrities, and tax professionals as we try to muddle through the new rules. So, stay tuned for humorous stories.

Two things Obamacare will do to your 2014 taxes

posted Jan 6, 2015, 3:47 PM by Andre Lindley


Alert: W-2s and 1099s for 2014 will soon be arriving in the mail. So it’s not too early to start thinking about putting together your Form 1040 for last year. For 2014, there are only two important federal income tax changes for individual taxpayers (beyond the usual inflation-indexing of tax rate brackets and various other tax parameters). Both changes have to do with Obamacare. Here’s what you need to know at tax preparation time.

Penalty for failure to carry ‘minimum essential coverage’

The Patient Protection and Affordable Care Act - also referred to as Obamacare - established a new federal income tax penalty for failure to carry so-called “minimum essential coverage.” Last year was the introductory year for the penalty, which can potentially be owed for any month when qualifying health coverage was not in force. (In IRS-speak, the penalty is called a “shared responsibility payment.”)

You don’t have to worry about the penalty if you (and all members of your family, if applicable) had qualifying coverage for all of last year. In this case, simply check the box on line 61 of Form 1040, and you’re done.

If you did not have qualifying coverage for the entire year, the first task is to determine if you are exempt from the penalty. For that, see the instructions to new IRS Form 8965 Health Coverage Exemptions (and instructions for figuring your shared responsibility payment). If you were exempt for last year, file Form 8965 with your 2014 Form 1040 to prove it. For additional information on exemptions, see IRS Publication 5187, Health Care Law: What’s New for Individuals and Families. Both Form 8965 and Publication 5187 can be accessed at

If you were not exempt, the next step is to calculate the penalty amount that you owe using the worksheet in the instructions to Form 8965. Enter the penalty amount on line 61 of your return. For 2014, the penalty can range from $95 or less to a good deal more for higher-income folks. For plain-English details, see Owe the IRS money? Here’s some good news. Also be aware that the penalty for 2015 and beyond can be much higher than the penalty for last year.

Moneyologist: How do I ask for money nicely?

Whether you have a small business or friends who owe you money, sometimes you just have to ask for it back. Moneyologist Quentin Fottrell offers tips on what to do.

See Beware of 2015 health insurance individual mandate penalty

Premium assistance tax credit

The other Obamacare change for 2014 was the debut of the so-called premium assistance tax credit (PTC in IRS-speak). It is available to eligible individuals and families who obtain health coverage in a qualifying plan by enrolling through a state-run insurance exchange or through the federal exchange (

In general, you are eligible for the PTC if your household income was between 100% and 400% of the federal poverty line and you did not have access to affordable employer-sponsored coverage last year. The allowable credit amount can vary widely depending on your specific circumstances. For additional information on the PTC, see IRS Publication 974, Premium Tax Credit.

The PTC can be advanced directly to the insurance company to lower your monthly premiums or it can be claimed when you file your return. You may not know the exact amount of your allowable PTC for last year until you actually file your 2014 Form 1040. Calculate the PTC using new IRS Form 8962, Premium Tax Credit. Taken together, Form 8962 and its instructions add up to a daunting 17 pages. Enjoy!

If advance PTC payments were made on your behalf last year, the amount of those payments should be reported by the exchange to you on new Form 1095-A, Health Insurance Marketplace Statement. You should receive Form 1095-A by no later than early February. Then calculate the difference between your advance PTC payments (if any) and the PTC amount you are actually entitled to claim on Form 8962. Enter any excess PTC amount on line 46 of Form 1040 and pay it when you file.

Finally, you should know that the PTC is a so-called “refundable credit.” That means you can collect the full allowable credit amount even when it exceeds your federal income tax liability for last year. Specifically, the PTC amount is first used to reduce your federal income tax bill. After your bill has been reduced to zero, any remaining PTC can be either refunded to you in cash or used to make estimated tax payments for the 2015 tax year.

The bottom line

The good news is there were very few changes to the 2014 Form 1040, compared with the 2013 version. The bad news is the two Obamacare-related changes are very complicated. You may need to hire a tax pro to sort things out. The other bad news is that the Supreme Court may decide to disallow the PTC for folks who got their coverage through the federal exchange. (See The year’s biggest tax stories.) However, if that happens then some sort of accommodation will probably be reached for folks who relied on collecting the credit for last year. Stay tuned. I’ll keep you posted.

Is Social Security taxable?

posted Jan 6, 2015, 3:43 PM by Andre Lindley

It all depends on your income and filing status. If you file taxes as an individual and your combined income — that’s your adjusted gross income plus one half of your annual Social Security benefit — is less than $25,000, you won’t pay federal income taxes on your benefits.

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But once you get past that $25,000 mark, that’s when you start seeing taxes. People who earn between $25,000 and $34,000 could have up to half of their benefits taxed, and people who earn more than $34,000 could see up to 85% of their benefits taxed.

Things are slightly different if you’re married. Married couples with a combined income of less than $32,000 won’t see their benefits taxed at all. You can find lots of amazing information about your Social Security benefits by visiting

2014 Tax Brackets: Surprise -- You Have More than One

posted Jan 6, 2015, 3:36 PM by Andre Lindley

Photo: Flickr user John Morgan.

The 2014 tax brackets look much like most years' tax brackets: A chart with several columns, lots of numbers, and a few percentage rates. They don't look that complicated -- and yet many people still misunderstand them.

For example, if you're in the 28% tax bracket, you might grumble thinking that all your income is being cut by 28%. You might be afraid to earn a few more bucks, lest it kick you into the next tax bracket and cost you a lot of money. That's not how it all works, though, because your tax rate probably isn't what you're assuming it is.

The 2014 tax brackets

First, here's a look at the tax brackets for 2014:

Tax Bracket

Single Filer

Married Filing Jointly or Qualifying Widow/Widower

Married Filing Separately

Head of Household


On taxable income up to $9,075

On taxable income up to $18,150

On taxable income up to $9,075, plus

On taxable income up to $12,950, plus


On On taxable income from $9,076 to $36,900

On taxable income from $18,151 to $73,800

On taxable income from $9,076 to $36,900, plus

On taxable income from $12,951 to $49,400, plus


On taxable income from $36,901 to $89,350

On taxable income from $73,801 to $148,850, plus

On taxable income from $36,901 to $74,425, plus

On taxable income from $49,401 to $127,550, plus


On taxable income from $89,351 to $186,350

On taxable income from $148,851 to $226,850, plus

On taxable income from $74,426 to $113,425, plus

On taxable income from $127,551 to $206,600, plus


On taxable income from $186,351 to $405,100

On taxable income from $226,851 to $405,100, plus

On taxable income from $113,426 to $202,550, plus

On taxable income from $206,601 to $405,100, plus


On taxable income from $405,101 to $406,750

On taxable income from $405,101 to $457,600, plus

On taxable income from $202,551 to $228,800, plus

On taxable income from $405,101 to $432,200, plus


On taxable income of $406,751 or more

On taxable income of $457,601 or more

On taxable income of $228,801 or more

On taxable income of $432,201 or more

Photo: Flickr user Phillip Ingham.

Don't make the mistake of thinking that if you're single and earn between $36,901 and $89,350, then you face a 25% tax on all your income. If you're a single filer with $50,000 in taxable income, you arein the 25% tax bracket -- but you're also in the 10% and 15% brackets.

A close look at the whole column for single filers shows that the first $9,075 of your income is taxed at just 10%, and the next $27,825 is taxed at 15%. It's only the income above $36,900 that's taxed at 25%. According to IRS-provided tax tables, a single filer earning $50,000 in 2014 will face a total tax of $8,363. Divide $8,363 by $50,000 and you'll get 0.17, or 17%. Thus the effective tax rate for that person is 17%, not 25%.

So don't go envying someone in the 15% tax bracket, because you're in it, too. And if you hear anyone grumble about being in the 39.6% tax bracket, know that it's only his or her income above $406,750 that's being taxed at that rate.

At, you can enter various taxable incomes and see which 2014 tax brackets apply and what their overall effective tax rate is. For example, someone earning $250,000 will be in the 33% bracket, but their effective tax rate will be 26.5%.

So go ahead and review the 2014 tax brackets, but do so knowing the difference between your tax brackets and your actual effective tax rate.

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