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| Good news: the rumor that no refunds will be issued until October 2015 is NOT true!! |
There are now seven income tax brackets, which will also break down differently depending on your filing status. Aside from this, capital gains taxes will also expand. These are the profits you earn from the sale of your capital assets, such as investments or property. Gains on investments held for less than one year are considered short-term gains and are lumped together with your ordinary income. Gains on investments held for more than one year receive special tax treatment. For 2015, the tax rate applied to long-term capital gains will depend on the tax bracket you fall into:
- Tax returns in the 10 and 15 percent tax brackets won't pay any capital gains taxes.
- Tax returns in the 25, 28, 33 and 35 percent tax brackets will pay 15 percent in capital gains taxes.
- Tax returns in the 39.6 percent tax bracket will pay 20 percent in capital gains taxes.
Payroll (FICA) taxes, (which consist of the Social Security tax, the Medicare tax and the new additional Medicare tax for higher-income earners,) are also increasing. Here are some details:
- Social Security tax: 12.4 percent of earnings on income up to $118,500
- Medicare tax: 2.9 percent on all earnings
- Additional Medicare tax: 0.9 percent on all income above $250,000 (if married and filing jointly), $125,000 (if married and filing separately) and $200,000 (if filing as single or head of household).
There are also changes to retirement contributions, and in some cases you could put away a lot more than you could last year. IRA's will also be limited to one rollover per person per year.
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