Tax Changes for 2016
For most of us taxpayers, tax season is stressful enough as is, but this year is bringing along some significant changes for personal tax filers. Have no fear though – by becoming familiar with these changes, which are not as huge or contrasting as you might think, you can make better choices regarding your tax situation this year. Here are 10 tax changes the IRS has set this season:
The most notable change is the tax deadline. Normally, the due date is April 15 every year unless that day is a holiday or falls on the weekend, in which case the deadline becomes the following business day. This time around, April 15 is a Friday, which also happens to be the Washington D.C. holiday, Emancipation Day. So the due date moves to the following Monday, April 18.
For those states that will also observe Patriots’ Day on April 18 – Massachusetts, Maine, and Wisconsin – the tax deadline will be extended again to April 19.
#2 – Health care penalties on the rise
If you still don’t have any qualifying health care coverage, you may get hit with a $695 penalty per adult, or 2.5% of your income – that’s a $410 and a 0.5% increase from last year. This year’s $2,085 family maximum is more than double from last year’s $975.
#3 – Tax brackets going up
Not that much – but tax bracket amounts are adjusted for inflation, and this year will show roughly a 0.4% increase.
#4 – Higher deductions for head-of-household filers
Though low inflation rates have kept standard deductions steady for most taxpayers, those that qualify as heads of households will see a $50 raise in standard deductions to $9,300 in 2016.
#5 – Rise on personal exemptions
Personal exemptions that taxpayers can take on their tax returns will increase by $50 – this means a total exemption amount of $4,050 for 2016.
#6 – Increase in contribution limits
Contribution limits for health savings accounts will remain at $3,350 for individual policies; however, a rise of $100 to $6,750 will be the maximum contribution for family policies.
#7 – Boost in the Earned Income Credit
The maximum amount for the Earned Income Credit will have a small increase this tax season – the maximum credit will rise $27 for those with three or four qualifying children, $24 for two children, $14 for one-child families, and a small $3 for those without children.
#8 – Higher exemption amounts from Alternative Minimum Tax (AMT)
Exemptions are going up by $300 this year for single taxpayers for a total of $53,900, and $500 for joint filers, which totals to $83,800.
#9 – Surge in estate tax exemption
Up from $20,000 in 2015, the lifetime exemption amount for the gift and estate tax will rise to $5.45 million – this limit is applied to estates of those who have passed away in 2016.
#10 – Change for other tax provisions if no renewal
Typically, the renewal of popular tax breaks are done at the last minute of the previous year. Often, these tax breaks are retroactively renewed after the start of the new year; however, if a provision is vetoed at the last minute, others could be changed or re-imagined as a result.
Everyone’s tax situation is different, so be sure to check with your local CPA or tax professional to successfully choose the best tax options to file on your return. And if you need more time to file, consider e-filing IRS Form 4868, Personal Tax Extension, with ExpressExtension. In minutes, you can receive an automatic 6-month extension for either single or joint tax filings.
Our goal is to make your e-filing experience as pleasant and easy as possible; assistance with the e-filing process is just a phone call away. Contact our live, US-based support professionals for any questions or concerns. We’re available Monday through Friday at (803) 514-5155 from 9 a.m. to 6 p.m. EST – or drop us a message 24/7 at [email protected]
