*** IMPORTANT ***
The new Affordable Care Act will have very critical information in order to prepare your 2016 income taxes. The law has a variety of tax implications and will be very difficult to complete without the basic knowledge of the new tax law(s). Please call me so I can be of any assistance in your tax preparation needs. The following listed below is a summary of the Affordable Care Act and the impact on each person filing an individual tax return.
All of us will be affected in some manner by this new tax act (some call Obamacare.) Three (3) new tax forms were released by the IRS as a result of this act for 2014. If you received a Form 1095 from an issuer or agency, we must have copies in order to prepare your tax return. If you did not receive a Form 1095, we must ask you a number of additional questions about your insurance coverage so we can help you avoid any penalties for failure to have health insurance. In 2015, all employers will be required to issue you a 1095 Insurance Form to verify your coverage at your place of employment. Please bring insurance cards with you to your appointment.
Tax Extender Bill
President Obama signed a new tax bill “Protecting Americans from Tax Hikes Act of 2016.” With dozens of temporary and permanent extensions, alternate dates, and new rules, it has plenty of turkey and dressing for the Christmas season. Here is our summary of those items that will affect most Americans. These changes are effective retroactively to the beginning of 2016:
A. PATH Act: Protecting Americans from Tax Hikes
This law allows additional time for the IRS to help prevent revenue lost due to identity theft and refund fraud to fabricated wages and withholdings. If you use the following forms:
– Earned Income Tax Credit (EITC)
– Additional Tax Income Credit (AITC)
Your refund will be issued between February 15th and 27th. File early and get your refund earlier
B. American Opportunity Credit – must provide the following information:
a. 1098 T
b. Paid tuition statement
C. $250 teacher deduction (with new inflation adjustment) (minor change for 2016)
D. Larger earned income credit
E. $175 mass transit and parking exclusion for employees
F. State and local sales tax deduction
G. Mortgage interest deduction as qualified residential expense
H. Principal residence mortgage debt exclusion
I. The new rates for the following are:
- Auto Business mileage: $.53.5
- Medical mileage: $.18
- Moving mileage: $.17
- Charitable mileage: $.14
J. The new rates for Daycare expenses are:
- Breakfast – $1.31
- Lunch/Dinner – $2.46
- Snacks – $.73
K. The last day to file your 2016 income taxes will be April 17, 2017
L. Earned Income Credit/Child Tax Credit: must provide the following information:
a. Ages of any/all children
b. Addresses of any/all children
M. Mortgage premium deduction is no longer allowed.
N. Home repair expenses not allowed with the exception of Geo-thermal equipment.
E – FILE BEGINS ON JANUARY 29th
SPECIAL BULLETIN – HEALTH COVERAGE
A. 1095 A: insurance issued by marketplace – need to be mailed by January 31st
B. 1095 B: insurance designed for taxpayers and their dependents – need to by mailed by March 30th
C. 1095 C: insurance issued by employers – need to be mailed by March 30th
For any and all other tax law changes, please call me with any other questions or concerns you may have regarding your individual tax return.
Refunds will not be sent out until February 2nd.
In the event you feel your identity has been compromised, please contact:
Eleven Tips to Choosing a Tax Preparer
Many people look for help when choosing a tax professional when it is time to file their tax return. The IRS recommends that you choose your preparer wisely. Even if the return is prepared by someone else, the preparer is legally responsible for what is on it. Like every year, the IRS wants you to use a tax preparer who will sign the returns and enter their Preparer Tax Identification Number (PTIN). Listed below are eleven (11) tips when choosing a tax professional. Also, listed are six (6) tips to consider when preparing your taxes for the upcoming year.
- Check the Tax Preparers’ qualification
- Verify your information is correct.
- Check the Tax Preparers’ history – ask for referrals.
- Ask about their service fees.
- Ask if they offer electronic filing.
- Provide all records needed to prepare your return.
- Make sure the Tax Preparer is accessible year round.
- Never sign a blank form without being explained to you.
- Review the entire return before signing it.
- Make sure the preparer signs the return with their PTIN.
- Report abusive Tax Preparers to the IRS.
Six Tips to Prepare for Next Year’s Taxes
- Prepare to Itemize Deductions
- Adjust Your Withholdings
- Store your Record(s) in a Safe Place
- Organize your Recordkeeping
- Shop for a Tax Professional Early
- Have all receipts available during the interview