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Various tax provisions – 2013 vs. 2014

• The maximum IRA deduction allowed for 2013 is $5,500 and will remain $5,500 in 2014 ($1,000 higher in for individuals age 50 and older).

• The maximum section 401(k), 403 (b) & 457 deferral amount is $17,500 in 2013 and 2014.  An additional $5,500 is allowed for individuals age 50 and older in both years.

• The standard mileage rate for 2014 is 56.0 cents per mile (the rate is 0.5 cent lower than the 56.5 cents per mile allowed in 2013).    In addition the standard mileage rate used for medical or moving expenses is 23.5 cents per mile in 2014 down from 24 cents allowed in 2013.  The standard mileage rate for charitable miles remains at 14 cents per mile.

• The section 179 limit (which allows taxpayers to write-off fixed assets all in the first year of operation) allowed in 2013 is $500,000. The 2014 limit is currently $25,000.  There is a possibility that the 2014 amount will be increased retroactively to January 1, 2014, however, it is $25,000 right now.

• The social security maximum taxable wage base has increased from $113,700 in 2013 to $117,000 in 2014.

• The 2014 NJ Unemployment wage base is $31,500 (up from $30,900 in 2013).

• The NJ hourly minimum wage is $8.25 in 2014, up from $7.25 in 2013.

• The NY hourly minimum wage is $8.00 in 2014, up from $7.25 in 2013.

• The amount of earnings allowed by a social security recipient that has not yet reached full retirement age before there is a reduction in social security benefits is $15,480 in 2014 ($15,120 in 2013). The amount allowed in the year full retirement age is reached is $41,400 in 2014 ($40,080 in 2013).  The amount allowed in the year full retirement age is reached is only for the portion of the year before the recipient reaches full retirement age.  Once full retirement age is reached there is no limit to the income that can be earned by a recipient.

• The individual gift tax exclusion of $14,000 in 2013 remains the same in 2014.  This is the amount of money a taxpayer is allowed to give any other individual without having any gift tax consequences.

• The federal estate tax unified credit equivalent which is the amount of assets a decedent can pass away with and have no federal estate tax due is $5,340,000 in 2014 which is up from $5,250,000 in 2013.  The New Jersey amount remains at $675,000.

Conclusion

This article explains some of the 2014 tax changes.  You would be well advised to speak to a professional as there are many other tax provisions that have changed and each taxpayer’s situation is unique.