(this is the most famous image of “Uncle Sam” according to the Library of Congress.
Mom told me to be S.M.A.R.T. She wanted me to be money smart. Smart is her acronym for “save money and reduce taxes”. She also used it to mean “save money and retire today”. Thanks Mom.
Part of becoming money smart (and teaching your kids to be money smart) is staying on top of taxes. This is usually taught as part of an elementary school social studies class as part of the lesson on government. However, my financial education classes go into the subject of taxes a little bit deeper.
Here are a few updates for the IRS 2014 tax brackets, courtesy of Forbes, which you can read about here and a select few are further below.
As always, get the advice of a tax professional (which I am not). But since Mom said to be S.M.A.R.T and always wanted me to share., I am sharing the information. Please run with it – right to your tax professional.
Earned Income Tax Credit (EITC). For 2014, the maximum EITC amount available is $3,304 for taxpayers filing jointly with one child; $5,460 for two children; $6,143 for three or more children and $496 for no children.
Child Tax Credit. For taxable years beginning in 2014, the value used to determine the amount of credit that may be refundable is $3,000 (the credit amount has not changed).
Kiddie Tax. For 2014, the threshold for the kiddie tax – meaning the amount a child can take home without paying any federal income tax – remains at $1,000.
Adoption Credit. For taxable years beginning in 2014, the credit allowed for an adoption of a child with special needs is $13,190; the maximum credit allowed for other adoptions is the amount of qualified adoption expenses up to $13,190. Phase outs do apply beginning with MAGI in excess of $197,880.
Hope Scholarship Credit. In 2014, the Hope Scholarship Credit cannot exceed $2,500. The amount you can claim is equal to 100% of qualified tuition and related expenses not in excess of $2,000 plus 25% of those expenses in excess of $2,000 but not to exceed $4,000.
Flexible Spending Accounts. The annual dollar limit on employee contributions to employer-sponsored healthcare flexible spending accounts (FSA) remains at $2,500 for 2014.
Individual Retirement Account Contributions. The $5,500 limit on IRA contributions remains the same in 2014.
Federal Estate Tax Exemption. The exclusion amount for estates of decedents who die in 2014 is $5,340,000, up from a total of $5,250,000 in 2013.
Federal Gift Tax Exclusion. The annual exclusion for gifts remains at $14,000 for 2014.
There’s still time to review spending and deductions for the rest of 2013. That’s why I want you to know about taxes and the changes that lie ahead.
You can get a free chapter of my new book LEMONADE SOLD OUT, as well as workshops, curriculum and other materials from sparksfly.org. Sparks Fly is financial literacy for YOU(th), where learning money management changes lives.