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This year, because of Emancipation Day, taxes are due on Monday, April 18th. (In some states, they're due on the 19th.)
You may have a few extra days to file, but that doesn’t mean you should wait until the last second — especially because there have been recent, key changes to the tax code that could affect your bill. Get started early so you'll have time to research what these 2015 tax law changes could mean for you.
Health insurance penalty
If you didn’t have health insurance in 2014 and didn’t qualify for an exemption, you paid a penalty of $95 per person or 1% of your household income, whichever was greater, when you filed your taxes. For 2015, the penalty has increased to the greater of $325 per person or 2% of your household income.
If you qualify for an exemption, you may be required to provide the Internal Revenue Service with a certificate number when you file. Be sure to apply for one from the state or federal marketplace long before your taxes are due.
IRA rollovers
This year, the IRS is placing stricter limits on IRA rollovers. Plan owners can still take distributions from an IRA or 401(k) and place the funds in another IRA or return them to the same IRA without paying taxes, provided the transfer took place within 60 days of the distribution. But now this is allowed only once per year across all of their IRA accounts.
Trustee-to-trustee transfers, in which your IRA brokerage company transfers the money directly to another IRA brokerage company, remain unlimited.
Flexible Spending Accounts
The rules have changed for unused funds in Flexible Spending Accounts, tax-advantaged savings accounts for health-related expenses. Prior to 2013, you'd lose all funds left in your FSA at the end of the year. Now, employers can allow their employees to roll up to $500 over to the next year or take a two-and-a-half month grace period to use the leftover funds.
Employers can only offer one of these options and don't have to offer either, so be sure to get details from your benefits administrator. Also note that if you do carry over a balance in your FSA, you'll no longer be able to put money into a Health Savings Account.
myRAs
This year, retirement savers have a new, government-backed option to build their nest eggs. The accounts, known as myRAs, are similar to Roth IRAs in that you contribute after-tax dollars which can be distributed tax-free, provided withdrawals meet certain requirements.
But unlike a Roth IRA, which you'll most likely invest in mutual funds, stocks or bonds, myRAs are solely invested in government savings bonds and will be backed by the U.S. government. This is good news, because it means that savers can never lose their principal investments. Additionally, myRAs require no minimum to open and are free of any administration fees.
Standard deductions
As it does every year, the standard deduction has changed. For single taxpayers and those who are married filing separately, it's $6,300. For those who are married and filing a joint return, it's $12,600. It's $9,250 for people filing as head of household.
Itemized deductions
If you itemize, rather than using the standard deduction, your itemized deductions may be limited based on your income. If you're filing as single and your adjusted gross income is $258,250 or more, your itemized deductions will begin to phase out. If you're married filing jointly, the phase-out begins at $309,900.
Personal exemptions
This year, personal exemptions are $4,000 per person — but these, too, start to phase out as your income increases. For single filers, the phase-out begins at $258,250, and you can no longer claim an exemption if you made $380,750 or more. For married persons, the phase-out begins at $309,900. Eligibility ends for couples who make $432,400 or more.
Tax breaks
Many tax breaks set to expire at the end of 2014 were either extended or made permanent. For instance, the energy efficient home improvement credit and the higher education tuition deduction were extended through 2016, and the educator expense deduction was made permanent. Make sure to find out if other tax breaks that impact your liability still apply.
Don't be late
A lot has changed this year — but not the penalties associated with filing late.
Getting an extension will give you until October 15th to file. But remember, an extension only applies to filing your tax return, not paying your tax bill. Your payment is due April 18th, whether you get an extension or not.
If you don’t file or pay your taxes by the deadline, the IRS will hit you with penalties and interest. You'll be charged a 5% penalty on the amount you owe, up to 25%, each month your return is late. If you don’t file within 60 days after the due date, you'll pay at least $135 or 100% of your unpaid tax, whichever is smaller. There are also penalties, though less stiff, if you file your taxes, but fail to pay the amount owed by the deadline.
You may have more time, but there’s still plenty to do. Pay close attention to this year’s changes to maximize your savings — and get your taxes in on time!
Craig Smalley is an Enrolled Agent and the founder of CWSEAPA, LLP and Tax Crisis Center, LLC.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.