New Increases for 2015
The Social Security Administration announced on October 22, 2014 that the wage base for computing the Social Security tax in 2015 will increase to $118,500 from $117,000, which is the current wage base for 2014.
What impact does this have on doctors? Assuming you make at least this much as a wage, you will pay an extra $93 of Social Security Tax to meet the new maximum amount o $7,347.00 per individual. Your employer will also match this amount or you will if you are the employer – so, the total additional tax amount for 2015 will be $186.
The IRS also announced many retirement plan dollar limits for 2015. Here are those that have an impact on the doctors with whom we work:
- Catch Up contributions for 401(k) and SIMPLE plans (for those age 50 and over) – increased from $5,500 to $6,000
- Defined Contribution Plans – the limit on the annual additions to a participant’s account increases from $52,000 to $53,000
- Elective deferrals for 401(k) plans – increases from $17,500 to $18,000
- Annual Compensation Limit – the maximum amount of annual compensation that be considered for purposes of a qualified plan will move from $260,000 to $265,000
- Elective deferrals for a SIMPLE plan – increases from $12,000 to $12,5000
- Simplified Employee Pensions (SEP’s) – the compensation limit for keeping employees from participating in the plan increases from $550 to $600
The IRA contribution limits remain unchanged at $5,500 per year.
Phone Scam is Catching Taxpayers
I had a doctor tell me that his spouse received a phone call, apparently from the IRS, requesting that she pay a sum of money immediately or they would have to arrest her. Needless to say, the client was a bit befuddled, and it turned out to be another scam to solicit money from innocent taxpayers.
On August 13, the IRS issued a warning to taxpayers to be extra vigilant regarding a telephone scam in which taxpayers receive unsolicited calls from individuals demanding payment while fraudulently claiming to be from the agency. According to IRS, the Treasury Inspector General for Tax Administration (TIGTA) has already received 90,000 complaints regarding this type of scam and has identified some 1,100 victims who have lost a total of $5 million as a result. “There are clear warning signs about these scams, which continue at high levels throughout the nation,” said IRS Commissioner John Koskinen. “Taxpayers should remember their first contact with the IRS will not be a call from out of the blue, but through official correspondence sent through the mail.” Angry and threatening calls from people claiming to be from IRS, combined with demands for immediate payment, should be a “big red flag,” Koskinen said, adding that people should immediately hang up and contact TIGTA or IRS. Additional information is available at http://www.irs.gov/uac/Newsroom/IRS-Repeats-Warning-about-Phone-Scams .
Mike DeVries is a CERTIFIED FINANCIAL PLANNER ™, Enrolled Agent, and a Certified Healthcare Business Consultant focusing on helping healthcare professionals. If you would like to learn more about becoming a client, contact Mike at www.vmde.com.
IRS Announces Benefit Plan Adjustments for 2014
The following limits have been announced by the IRS for the year 2014:
- 401(k) elective limits stay the same for 2014 – $17,500
- Catch-up deferrals for those 50 or older remain the same – $5,500
- Considered compensation limit moves up to $260,000 (previously $255,000)
- Simple IRA deferrals also stay the same for 2014 – $12,000
- Social Security Wage Base increases to $117,000 (previously $113,700)
The IRS also modified the “use-or-lose” rule for health flexible spending arrangements in order to allow, at the plan sponsor’s option, participating employees to carry over up to $500 of unused amounts remaining at year-end rather than having to forfeit all the unused amounts. To utilize this option , your plan must be amended and this can still be done for 2013