2014: By the Numbers



Here’s a summary of some of the recently released numbers affecting tax benefits in 2014:

$        Annual exclusion from gift taxes (the amount an individual may give to an unlimited number of donees each year) remains at $14,000.  The annual exclusion for gifts to a non-citizen spouse increases from $143,000 to $145,000.

$        Federal estate and gift tax exemption increases to $5,340,000, per person (due to indexing for inflation), up from $5,250,000 in 2013, with the federal estate tax exemption permanently portable at death with a permanently flat 40% tax rate.

$        Generation-skipping tax exemption increases to $5,340,000.

$        Massachusetts estate tax exemption (threshold) remains at $1,000,000 per person.

$        Maximum 401(k) and 403(b) contribution amounts hold steady at $17,500.  Workers 50 years of age or older in 2014 can continue to contribute an additional $5,500 to their 401(k) and 403(b) plans, bringing the total contribution amount to $23,000.

$        Basic IRA contribution amount remains at $5,500, and individuals 50 years of age and older can continue to make an additional $1,000 “catch up” contribution.

$        The annual amount of earnings subject to social security taxes increases to $117,000, up from $113,700.

$        The Pease limitations on itemized deductions claimed on income tax returns will begin with incomes of $254,200 or more for those filing as single or $305,050 for those married filing jointly.  Also, in 2014 the threshold to claim an itemized deduction for medical expenses increases from 7.5% to 10% of adjusted gross income for taxpayers younger than 65.

$        The 3.8% Medicare surtax on net investment income remains in effect.  Generally, the surtax is paid on the lesser of net investment income and the excess of modified adjusted gross income over $250,000 for those married filing jointly and $200,000 for those filing as single.

$        The kiddie tax threshold remains at $2,000 in 2014, and still applies to children under 19 years of age and to full time students under 24 years of age.

About Tracy Craig

Tracy is a partner and chair of the firm's Trusts and Estates Group. She focuses her practice in estate planning, estate administration, prenuptial agreements, tax-exempt organizations, guardianships and conservatorships and elder law. Before joining Mirick O'Connell, she was counsel at Testa, Hurwitz & Thibeault LLP, in Boston.
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