With the holidays behind us and long winter days ahead, now is a great time to start dusting off that shoe box of receipts and preparing for the 2016 tax filing. A few things are different this tax year, so knowing what you’re responsible for and when can remove the stress from tax preparation and allow you to smoothly sail through this year’s returns.
1. Tax Deadline is April 18, 2016. Due to the Emancipation Day holiday on Friday, April 15, 2015 in Washington D.C., the federal filing deadline has been shifted to Monday, April 18th. Additionally, if you are a resident filing in one of the six New England states, Patriot’s Day falls on Monday, April 18, 2016, pushing the deadline one day further to Tuesday, April 19, 2016.
2. Obamacare related penalties are rising this year. If you did not have qualifying health care in 2015, you may face increased penalties related to the Affordable Care Act. The penalties started at %95 per adult, or 1% of income above the filing threshold in 2014, but for 2015, those penalties rose to $285 per adult or 2% of income above the filing limit. For future planning, the penalty amounts will rise again to $695 per adult or 2.5% of income. The family maximum penalty will also increase from $975 in 2015 to $2,085 in 2016, so plan now to obtain coverage or start saving to pay the penalties next year.
3. Standard deductions for head-of-household filers increasing. While it’s not a huge increase, there is a $50 increase to $9,300 in 2016.
4. While going uninsured for health coverage may bring hefty penalties, seeking a high deductible health plan with a Health Savings Account (HSA) may provide more opportunities to put away dollars on a pre-tax basis. For 2016, contribution limits for individual plans remains at the 2015 rate of $3,350 but the maximum family contribution increased b $100 to $6,750. There is also a catch-up contribution of an additional $1,000 for those aged 55 or over.
5. If you have a big family (three or more dependent children) then there’s a little more good news for you this tax year to $6,269, up $27. For a family with two children, the maximum is $5,572, up $24 from 2015. And for one-child families, the maximum is $3,373, up just $14 from last year. Childless families can claim up to $506 for 2016.
6. If you’ve had a good financial year, then you’ll want to keep your sights on the Alternative Minimum Tax (AMT). Single taxpayers will see an increase in the exemption to $53,900 and joint filers will see an increase of $500 to a maximum of $83,800 for 2016.
Keeping track of all the changes in tax law and the rules behind the laws can be overwhelming. Early planning now with a Small Business Tax Advisor can save you hours of worry and confusion at the tax deadline. For assistance, click Find an Accountant to locate a PASBA small business advisor in your area.
PASBA member accountants bring the collective resources of a nationwide network of Certified Public Accountants, Public Accountants, Enrolled Agents and other practitioners available to answer your tax and financial questions and streamline your business accounting, bookkeeping, and payroll operations.
To find a trusted accountant in your area, visit www.SmallBizAccountants.com.
Please be advised that, based on current IRS rules and standards, any advice contained herein is not intended to be used, nor can it be used, for the avoidance of any tax penalty that the IRS may assess related to this matter. Any information contained in this article, whether viewed or subsequently printed, cannot be relied upon as qualified tax and accounting advice. Any information contained in this article does not fall under the guidelines of IRS Circular 230