Will there be a delay in getting federal tax refund in 2015?

Today, we contacted the Internal Revenue Service and were informed explicitly that their was no chance of 2014 Tax Refunds being delayed until October 2015. We were also informed that there might be a slight delay due to tax laws not being passed early enough in 2014: article here. This would mean probably a mere two week delay though. We tracked down the original story and Snopes.com wrote an explanation on this. This is the answer to a very frequently asked question, “will there be a delay in getting federal tax refund in 2015?” We have posted the article for your viewing.

On 29 September 2014, the National Report published an article positing that the payment of federal tax refunds for 2014 would be delayed until October 2015:

 

Normally when you file your taxes whatever money is owed back to you is quickly repaid. The process of getting your money back has been made even quicker in recent years through the use of E-file and direct deposit of Federal tax rebates. But starting in 2015 Federal tax refunds for the 2014 fiscal year are going to take longer for Americans to receive. A lot longer. The deadline to have your Federal taxes filed will remain April 15th, but under new directives issued to the IRS no refunds are to be issued before October 15th, 2015. This means that early filers who normally receive their refunds around the beginning of February will have to wait an additional 7 months longer than normal to get the money owed to them.

The National Report article used fabricated quotes from White House Press Secretary Josh Earnest and politician Rand Paul to make it appear like an authentic news story. Although there is no truth to the claim that 2014 tax refunds will be delayed until 2015, nearly 10,000 people had shared the article on Facebook within days of its publication.

The National Report is a fake news site whose (since removed) disclaimer page notes that:

National Report is a news and political satire web publication, which may or may not use real names, often in semi-real or mostly fictitious ways. All news articles contained within National Report are fiction, and presumably fake news. Any resemblance to the truth is purely coincidental.

In addition to the IRS tax refund delay article, the site has published posts like “IRS Plans to Target Leprechauns Next,” “Boy Scouts Announce Boobs Merit Badge,” and “New CDC Study Indicates Pets of Gay Couples Worse at Sports, Better at Fashion Than Pets of Straight Couples.”

Found at Snopes.com.

Find out when you’ll get back your 2014 Tax Return with our 2015 IRS E-File Cycle Chart for Tax Year 2014.

Will there be a delay in getting federal tax refund in 2015?

2015 Tax Brackets

Introduction

Every year, the IRS adjusts more than 40 tax provisions for inflation. This is done to prevent what is called “bracket creep.” This is the phenomenon by which people are pushed into higher income tax brackets or have reduced value from credits or deductions due to inflation instead of an actual increase in real income.

The IRS uses the Consumer Price Index (CPI) to calculate the past year’s inflation and adjusts income thresholds, deduction amounts, and credit values accordingly. Rather than directly adjusting last year’s values for annual inflation, each provision is adjusted from a specified base year. For more information, see the methodology, below.

Estimated Income Tax Brackets and Rates

In 2015, the income limits for all brackets and all filers will be adjusted for inflation and will be as seen in Table 1. The top marginal income tax rate of 39.6 percent will hit taxpayers with adjusted gross income of $413,200 and higher for single filers and $464,850 and higher for married filers.

Table 1. 2015 Taxable Income Brackets and Rates (Estimate)
Rate Single Filers Married Joint Filers Head of Household Filers

10%

$0 to $9,225 $0 to $18,450 $0 to $13,150

15%

$9,225 to $37,450 $18,450 to $74,900 $13,150 to $50,200

25%

$37,450 to $90,750 $74,900 to $151,200 $50,200 to $129,600

28%

$90,750 to $189,300 $151,200 to $230,450 $129,600 to $209,850

33%

$189,300 to $411,500 $230,450 to $411,500 $209,850 to $411,500

35%

$411,500 to $413,200 $411,500 to $464,850 $411,500 to $432,200

39.6%

$413,200+ $464,850+ $439,000+

Source: Author’s calculations.

 

Standard Deduction and Personal Exemption

The standard deduction will increase by $100 from $6,200 to $6,300 for singles (Table 2). For married couples filing jointly, it will increase by $200 from $12,400 to $12,600.

The personal exemption for 2015 be $4,000.

Table 2. 2015 Standard Deduction and Personal Exemption (Estimate)
Filing Status Deduction Amount
Single  $                            6,300.00
Married Filing Jointly  $                          12,600.00
Head of Household  $                            9,250.00
Personal Exemption  $                            4,000.00

Source: Author’s calculations.

 

PEP and Pease

PEP and Pease are two provisions in the tax code that increase taxable income for high-income earners. PEP is the phaseout of the personal exemption and Pease (named after former Senator Donald Pease) reduces the value of most itemized deductions once a taxpayer’s adjusted gross income reaches a certain point.

The income threshold for both PEP and Pease will be $258,250 for single filers and $309,900 for married filers (Tables 3 and 4). The PEP phaseout will end at $380,750 for singles and $432,400 for couples filing jointly, meaning these taxpayers will no longer have a personal exemption.

Table 3. 2014 Pease Limitations on Itemized Deductions (Estimate)
Filing Status Income
Single  $     258,250.00
Married Filing Jointly  $     309,900.00
Head of Household  $     284,050.00

Source: Author’s Calculations

 

Table 4. 2015 Personal Exemption Phaseout (Estimate)
Filing Status Phaseout Begin Phaseout Complete
Single  $          258,250.00  $        380,750.00
Married Filing Jointly  $          309,900.00  $        432,400.00
Head of Household  $          284,050.00  $        406,550.00

Source: Author’s calculations.

 

Alternative Minimum Tax

Since its creation in the 1960s, the Alternative Minimum Tax (AMT) has not been adjusted for inflation. Thus, Congress was forced to “patch” the AMT by raising the exemption amount to prevent middle class taxpayers from being hit by the tax as a result of inflation.

On January 2, 2013, the American Taxpayer Relief Act of 2012 indexed the income thresholds to inflation, preventing the necessity for an annual patch.

The AMT exemption amount for 2015 is $53,600 for singles and $83,400 for married couple filing jointly (Table 5).

Table 5. 2015 Alternative Minimum Tax Exemptions (Estimate)
Filing Status Exemption Amount
Single  $            53,600.00
Married Filing Jointly  $            83,400.00
Married Filing Separately  $            41,700.00

Source: Author’s calculations.

 

Earned Income Tax Credit

2015’s maximum Earned Income Tax Credit for singles, heads of households, and joint filers is $503 if the filer has no children (Table 6). For one child the credit is $3,359, two children is $5,548, and three or more children is $6,242.

Table 6. 2015 Earned Income Tax Credit Parameters (Estimate)
Filing Status No Children One Child Two Children Three or More Children
Single or Head of Household Income at Max Credit

$6,580

$9,880

$13,870

$13,870

Maximum Credit

$503

$3,359

$5,548

$6,242

Phaseout Begins

$8,240

$18,110

$18,110

$18,110

Phaseout Ends (Credit Equals Zero)

$14,820

$39,131

$44,454

$47,747

Married Filing Jointly Income at Max Credit

$6,580

$9,880

$13,870

$13,870

Maximum Credit

$503

$3,359

$5,548

$6,242

Phaseout Begins

$13,760

$23,630

$23,630

$23,630

Phaseout Ends (Credit Equals Zero)

$20,340

$44,651

$49,974

$53,267

Source: Author’s calculations.

 

Each tax parameter is adjusted for inflation by taking its base value (from legislation) and multiplying it by the current fiscal year’s average Consumer Price Index (CPI) and then dividing that by the base fiscal year’s CPI.

Each parameter is rounded to either the nearest $10, $25, or $100 (depending on the specified rounding method in the legislation).

For example, the base value for the top of the 10 percent tax bracket for singles is $7,000. This number is multiplied by the average CPI for fiscal year 2014 (235.69) and then divided by the average CPI for fiscal year 2002 (178.68): $7,000 * (235.69/178.68) = $9233. This value is then rounded down to the nearest $25 to yield 2015’s 10 percent tax bracket of $9,225.

 

Table 7. Tax Parameters, Base Years, and Base Values
Base Year Parameter Base Value (Single; HoH; Married) Rounding Convention

1987

Standard Deduction $3,000; $4,400; $6,000 Down to nearest $50

1988

Personal Exemption $2,000 Down to nearest $50

1992

15% Bracket $22,100; $29,600; $44,200 Down to nearest $50
25% Bracket $53,500; $76,400; $89,150 Down to nearest $50

1993

28% Bracket $115,000; $127,500; $140,000 Down to nearest $50
33% Bracket $250,000; $250,000; $250,000 Down to nearest $50

1995

EITC See Table 8, below Nearest $1

2002

10% Bracket $7,000; $10,000; $14,000 Down to nearest $25

2008

EITC Marriage Penalty Fix $5,000 Nearest $10

2011

AMT $50,600, N/A, $78,750 Nearest $100

2012

35% Bracket $400,000; $425,000; $450,000 Down to nearest $50
PEP $250,000; $275,000; $300,000 Down to nearest $50
Pease $250,000; $275,000; $300,000 Down to nearest $50

Note: Bracket values are the tops of each bracket.

 

 Table 8. EITC Base Parameters
No Children One Child Two Children Three or More Children
Credit Rate

7.65%

34%

40%

40%

Phaseout Rate

7.65%

15.98%

21.06%

21.06%

Income, Max Credit

$4,220

$6,330

$8,890

$8,890

Income, Phaseout

$5,280

$11,610

$11,610

$11,610

 

Tax Season 2015 Begins….

Tax Season 2015 starts January 23rd 2015.

The I.R.S is expected to start accepting 2015 tax returns as of January 23rd, 2015 per the 2015 IRS Refund Cycle Chart. This doesn’t mean that you will not be able to submit your 2014 tax return to the I.R.S before then though. All of the I.R.S. tax forms are usually available by January 5th (2015). If filing by January 23rd, 2015, check our 2015 IRS Refund Cycle Chart to see when you will get your return back. Also if you will owe taxes in 2015, this can give you an idea of the earliest date that you would need to pay them. Tax Season 2015 will begin very soon, so the time to start preparing is now.

Tax Season 2015DISCLAIMER: This is merely an estimate based on prior year(2014). We do not guarantee this date and the I.R.S. does not release official dates to the public.

Tax Season 2015

Tax Season 2015 starts

Tax Season 2015 begins

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Tax Season 2015 starts

The Tax Changes in President Obama’s Fiscal Year 2015 Budget


President Obama released his fiscal year 2015 budget yesterday. Overall, the president proposes to increase revenue by $1.759 trillion over ten years. This new revenue comes in the form of a couple large tax changes, numerous small tax changes, and new fees (which we don’t discuss in this post).

This analysis is a general overview and is based on the few specifics that the White House’s budget documents provide.

Major Changes for Individual Taxpayers

The President’s fiscal year 2015 budget introduces and expands a number of programs. He proposes to expand the child tax credit and the EITC, two of the largest family tax benefits. His budget also proposes to alter retirement plans and create an auto-enrollment IRA program. In order to pay for these expansions, his budget will raise taxes on high-income earners through a series of changes to tax expenditures, most notably placing a cap on the value of itemized deductions. Continue reading The Tax Changes in President Obama’s Fiscal Year 2015 Budget

When can you efile in 2015?

When is the first day to efile in 2015?

First Date to Efile in 2014January 23 2015 is the first day to efile in 2014 according to the 2015 IRS Refund Cycle Chart for Tax Year 2014. This information is based off prior year’s information and not I.R.S. confirmed. We will be keeping you up to date with the latest in IRS news and Income Tax IRS Refund Cycle Chart dates as they are posted.

Discuss this and more on the Income Tax Forums.