The Individual Investor’s Guide to Personal Tax Planning 2014

The Individual Investor’s Guide To Personal Tax Planning 2014 Splash image

We start this year’s tax guide with some good news: You may have a smaller federal tax bill in 2015.

The Internal Revenue Service (IRS) adjusted several line items to account for inflation. This indexing increases the dollar amounts defining each tax bracket and the dollar amounts for various exemptions and deductions. The net result is that less of your income may be taxed. Plus, if you are just above the breakpoint for a tax bracket this year, the adjustments could potentially put you into a lower tax bracket in 2015.

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P Rathinasamy Pa from FL posted 12 months ago:

" This is a per-spouse exclusion and it is portable, meaning if one spouse passes away, the surviving spouse can claim the exclusion, resulting in a total effective exclusion of $10.68 million in 2014 and $10.86 million in 2015. The large figures will prevent most families from having to pay estate taxes." Please explain by giving examples.- Excellent & exhaustive article. Thanks.

Charles Rotblut from IL posted 12 months ago:

The IRS has a question and answer section on their website regarding estate taxes that you may find to be helpful.


James Kim from FL posted 12 months ago:

How you handle spousal death in the middle of the year and is there special provision for that kind of situation for tax preparation? Any help would be appreciated.

Charles Rotblut from IL posted 12 months ago:

James, IRS Publication 17 discusses the topic. My sympathies for the loss.


Robert Mellon from florida posted 12 months ago:

standard deductions. you have no figures for those over 65 or legally blind.have these been taken away or not.

Charles Rotblut from IL posted 12 months ago:


The standard deduction figures are listed in the 2014 Allowable Tax Benefits and the 2015 Allowable Tax Benefits tables. It's additional $1,200/$1,550 for married and singles over 65 and blind.


Harry Mccullough from PA posted 12 months ago:

Excellent and exhaustive...yet.
I don't usually see this considered tax planning, but if you keep your adjusted gross income under 85K (170K for joint) you can avoid increased medicare premiums.If it's this article, and I missed it, I apologize.
Thank you.

David Lillard from KS posted 12 months ago:

Medicare recipients are taxed significantly for tax-exempt interest income in premium surcharges.

Richard O from CA posted 11 months ago:

Harry McCullough has an excellent point that is important for retired seniors to do their tax planning. It is also useful for adult children who are either doing of helping their senior parent or parents do their tax planning.

Both Part B premiums and Part D premiums are incrementally affected at various income levels.

Suggest that going forward that AAII add this information to your year end Tax planning information. Not all seniors are internet savvy and know to go to the website and find the relevant information and then to use it.

If one is doing yearly incremental IRA to ROTH conversions, considering the MAGI impact of the $170,000 threshold, or the other rate thresholds that apply to Part B and Part D premiums can be critical to tax and expense planning.

Sj Muse from OH posted 11 months ago:

How do you go about gift ting cash to an adult child ? What are the steps ?
Thanks in advance for response/s

Charles Rotblut from IL posted 11 months ago:


See the IRS's FAQ on the Gift Tax.


Charles Rotblut from IL posted 11 months ago:

Answers to many tax questions can be found by simply typing "[tax subject] IRS" into Google. Google will generally call up the appropriate page on the IRS' website with information.


Kimland from KY posted 11 months ago:

I am curious about asset candidates for an IRA account, to avoid occupying it with assets that are already tax efficient.

At the same time I take interst in assets like MLPs, REITS and Royalty Trusts, which are treated specially by the taxman. The nature of tax treatment to any of these is rather opaque to me, so I cannont evaluate whether it would be beneficial or redundant to hold them in an IRA. Is there any guide as to what types of investments would not benefit from IRA provisions?

Charles Rotblut from IL posted 11 months ago:


See in the March 2010 AAII Journal.


Raymond Somers from NJ posted 11 months ago:

Obviously a tremendous amount of work was required to produce this well-written article.
A few minor points of clarification/correction:
To determine how much of your Social Security is taxed the Social Security Administration’s “combined income” must be adjusted for the student loan interest deduction, the tuition and fees deduction and several other less common items.
It is not clear what is meant by the amount reported for tax-exempt income on the 1099-INT “is for information only”. It is used in calculating how much Social Security is taxable, in filling out Affordable Care Act tax forms and for Medicare to calculate your monthly Part B premiums.
To say that assets converted into a Roth IRA can be withdrawn tax-free at any time is misleading because a 10% penalty may apply.
Those still working after age 70 1/2, contributing to an employer-sponsored retirement plan and owning less than 5% of the company can delay the first RMD until April 1 of the year AFTER they retire, unless the plan requires all employees to begin taking RMD at age 70 ½.
The maximum tax rate on collectibles for those in the 15% bracket or below is 15%.
Note that to qualify for the safe harbor for underpayment penalty it is necessary to make timely quarterly estimated payments; i.e., one cannot make up for underpayment in the first 3 quarters by making a large estimated payment in the 4th.
For any gift to charity of $250 or more a written acknowledgement from the charity is required.

Roger Grossel from FL posted 11 months ago:

Great Tax Guide.
Re: Tax extenders bill. My information says that HR5771 became public law 113-295 on Dec 19, 2014. Sec 105 includes the deduction for state & local general sales taxes.
It would be helpful for members if AAII would make important updates such as this widely available to members!

Edward Nieters from NY posted 10 months ago:

I have been in a high-deductible health plan for a few years now and have contributed to an HSA each year. I now have a decent balance in the account that rolls over each year.

I have two questions about this account:
1. What happens to my ability to use it if I switch to a non-high-deductible health plan?

2. How is that account treated in my estate to my heirs when I die? Do they have to pay a penalty when the estate is settled or do they have to roll it over into an HSA / health-related account of their own?



Charles Rotblut from IL posted 10 months ago:


I'll going to refer you to IRS Publication 569, which discusses health savings accounts.


Steven Tanimura from NJ posted 10 months ago:

I may be wrong, but I think there's an error in your discussion on the kiddie tax. Bullets 1 & 2 should read "...if your child's income... is more than half of the child's overall support.", not "...less than half". This is found in the instructions to Form 8615 on page 1 in the section "Who Must File" where (b) and (c) states "...was more than half of the child's support"

Raymond Somers from NJ posted 10 months ago:

Steve Tanimura:
I believe you missed the "not" in the instructions to Form 8615.

Charles Rotblut from IL posted 10 months ago:


J.K. Lasser's Your Income Tax says "the kiddie tax applies not only to children under age 18, but also to children who are age 18 or full-time students age 19-23 who do not have earned income exceeding half of their support."


Brian Casiday from CA posted 10 months ago:

Charles: Thanks for the as-usual impressive and exhaustive Tax Guide. I don't understand p. 27, State Taxes - "If accelerating deductions makes sense for you and you choose to claim a deduction on your state and local income taxes, you may want to prepay the balance on your estimated state tax liability...This secures the deduction on your 2014 return..." I made my fourth estimated tax payment, for tax year 2014, on January 5, 2015, and I don't see how the validity of any deductions I will claim on my 2014 return would have been affected if I had made estimated payment four in December. Would appreciate an explanation. Thanks.

Charles Rotblut from IL posted 10 months ago:


Depending on your tax situation, it may make more sense to pay as many planned expenses in one tax year over another to boost your deductions for that particular tax year (e.g. 2014 instead of 2015).


Brian Casiday from CA posted 10 months ago:

Thanks. I do what you suggest - bunch deductions. The misunderstanding was that I thought you were talking about a deduction ON the state return, not a deduction FOR estimated state taxes on the FEDERAL return.

AJ Falk from FL posted 10 months ago:

Purchased an investment property AUG2014 and was wondering what forms are necessary to show income and deductions.

Patrick Roszel from AZ posted 7 months ago:


Peter Cowley from MA posted 7 months ago:

Net Investment Income Tax surprised me this year. It is significant, yet I have heard little about it. Are there any strategies for avoiding this?

Charles Rotblut from IL posted about 1 month ago:

FYI...the IRS has announced its annual inflation adjustments for 2016.


Charles Rotblut from IL posted about 1 month ago:

FYI...the IRS has announced its annual inflation adjustments for 2016.


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