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| Tax School Homepage |
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15 Domain Updates 1 - Federal Tax Updates |
| 2014 Tax benefits increase and Inflation adjustment items |
| The cost of living standards are derived from the Bureau of Labor Statistics (BLS) Consumer Expenditure Survey (CES). This information is collected by survey from households and families on their buying habits and expenditures, their income and household size. The cost of living standards vary by location. The cost of living standards in California, for example, are different than the cost of living standards in Texas. Therefore, the national cost of living standards are set to try to include everyone involved. The IRS tries to apply national standards for food, clothing and other items. |
| The national standards have been established for five necessary expenses. These necessary expenses include food, housekeeping supplies, apparel and apparel services, personal care products and personal care service and other miscellaneous items. The national standards for food, clothing and other items includes an amount for miscellaneous expenses. This is considered a deviation that does not include any portion of expenses that exceed certain standards. |
| If a taxpayer does not agree with the cost of living standards for which deductions and deductions are based on, then taxpayers are given the option to use the actual expenses on many cases. This is usually done only if the taxpayer provides the documentation that supports their deductions. |
| When new tax rates are announced and new tax laws are passed, annual inflation adjustments are taken into account for every tax provision for the new tax year. This includes adjustments to tax rates, tax tables and also the normal cost of living adjustments. For example, the tax rate of 39.6 percent affects singles whose income exceeds $406,750 ($457,600 for married taxpayers filing a joint return). This is up from $400,000 for single taxpayers and $450,000 for married filing jointly taxpayers. |
| As a result of inflation adjustments, we see changes in the standard deductions for every filing status each year. For instance, the standard deduction rises to $6,200 for single and married persons filing separate returns for tax year 2014. |
| When the
adjustment to the standard deduction amounts for inflation, we get the the
following for 2014: * Standard deduction for single or married filing separate filing status' is $6,200 * Standard deduction for married filing joint filing status is $12,400 * Standard deduction for head of household filing status is $9,100 The addition deduction for seniors (65 or older) or people who are blind is $1,200 for married taxpayers or $1,550 for single taxpayers. |
| Starting in 2013, the personal exemption amount is subject to reduction. The personal exemption amount has increased to $3,950 in 2014. The total personal exemptions for which you are entitled will |
| Copyright © 2014 [Hera's Income Tax School]. All Annual Federal Tax Refresher Course rights reserved. |
| Revised: 05/28/15 |
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