What Americans Should Know About The 2014 Tax Brackets

With only a few days left until the new year rolls in, many Americans are conducting their year-end tax planning and establishing their tax plans for 2014. The Internal Revenue Service recently released the income tax brackets for the 2014 tax year, which will be essential in helping individuals make informed decisions about their various strategies next year, including estate and gift taxes.

Tax BracketsFor many filers, the 2014 rates will be a step up from this year's parameters due to inflation. For instance, the standard deduction will increase by $100 to $6,200 for singles, and $12,400 for married joint filers. Head of Household filers can take a standard deduction of $9,100. The personal exemption amount will rise to $3,950 in 2014, up from $3,900 in 2013. The 2013 exemption of $80,800 for married joint filers will also increase by $1,300 in 2014. For single filers it will rise by $900 from the $51,900 level in 2013.

In addition to changes to the standard deduction and personal exemption amounts, the lifetime gift and estate tax exemption was made permanent and indexed for inflation for 2014. Although the tax exclusion on annual gifts will remain unchanged at $14,000, the lifetime gift and estate tax exemption will increase from $5.25 million in 2013 to $5.34 million next year. This increase may greatly help high net-worth earning individuals and business owners pass on a greater share of their wealth to future generations and make more calculated decisions as they relate to trusts and other vehicles aimed to keep family wealth intact.

It's also important to note the "portability" of a deceased spouse's unused exclusion amount, which was made a permanent part of the American Taxpayer Relief Act in 2012. The rule allows a surviving spouse to use the deceased spouse's unused estate tax exclusion - up to $5.34 million next year.

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James F. McDonough, Jr. concentrates on wealth preservation and estate planning for high net worth individuals, closely held business matters and ownership succession, estate administration and income tax planning. He worked for three years for the public accounting firm, then known as Touche Ross, where he obtained his license as a Certified Public Accountant in 1983. In 1984, he was employed as a tax attorney by Union Camp Corporation where he engaged in planning for corporate income deferred compensation, qualified plan and tax-free exchanges. In 1986, Mr. McDonough was employed as Tax Manager for Monroe Systems For Business, Inc. Thereafter, he was employed as a tax attorney for five years where he engaged in corporate and estate tax planning and estate administration and litigation. For more information, please visit James McDonough's full biography at Scarinci Hollenbeck

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