Learning about changes to 2015 tax code can save you from “sticker shock” on tax day.
It seems that each passing year brings updates or changes to IRS tax codes, and 2015 is no exception. Here are a few of the tax code changes for 2015.
Crackdown on IRA rollovers: In years past, you could withdraw funds from one IRA, wait for 60 days, and then place those funds into another IRA. Effective this year, you are allowed only one IRA rollover per 12 month period. You could be penalized for any rollovers beyond the one-per-year limit.
ACA penalty: The Affordable Care Act, affectionately known as “Obamacare,” made health insurance accessible to a broader cross-section of people that were previously ineligible for individual or government-based plans, or who had no access to employer-sponsored plans.
Taxpayers who decided to opt out were hit with a relatively mild $95.00 fee unless they could file for an exception to that provision.
This year, non-compliant taxpayers will see a penalty of at least $325.00 per person, a substantial increase from last year. If you plan on filing for an exemption, you’ll need to do so quickly as the IRS requires a certificate for some exemptions.
ACA exemptions granted on a case-by-case basis. This tool from healthcare.gov will walk you through a series of questions to help you determine whether or not you’re eligible for an exemption.
Foster Care payments for relatives: In previous tax years if you were a legal foster parent for a young relative and receiving payments from either MedicAid or a licensed government agency in exchange for foster care, you had to declare those payments as income each year. This was due in part to the provision that stated a relative could not be considered a foster child.
Beginning this tax year, if you have a younger relative living with you that is also your foster child, any payments received for non-skilled medical support can be excluded from your taxable income.
Great news for Pell Grant recipients: Pell Grant funds can now be allocated toward your living expenses instead of just toward tuition, fees and books. This change increases the actual amount of educational expenses you would report in claiming one of the higher education tax credits.
Tomorrow: Learn more about additional tax code changes for 2015.