Time for our annual tax update for all of our clients. Those of you who aren’t our clients yet can read this and decide to become a client of ours; we won’t mind! 🙂
As a reminder, New York State’s Corporate Minimum Fixed Dollar amount is based on Gross Receipts. Extensions should be filed by the beginning of March if possible to allow time for processing. For those of you who file extensions and may owe tax, it is important to note that the tax is due April 15 for personal returns, even if you do not file until October.
New for 2016: Affordable Healthcare Act.
Most of you are aware of the government mandated health insurance. There are many facets to this law, but for 2016, the penalty has increased to a minimum of $695, for those who are not covered by a health insurance plan. If you are married with dependent children it can be upwards of more than $1000, depending on how long you have been without coverage, etc. The penalty is calculated on and reflected on your tax return.
Here are a few of the of the credits/deductions that have been made permanent:
* Educator Credit $250
* Sales tax deduction on Schedule A Itemized instead of state and local income tax
* 179 Depreciation Deduction – Limit is set at $500,000 with a cap of 2 million
* Charitable distribution from and IRA (tax free) for individuals over 70 ½ years old
* Mortgage Insurance Premium – Deduction on Schedule A
For those of you who have children in college, the American Opportunity Credit is still available up to $2,500, which can be used for all four years of post-secondary education. Of the $2,500 40% may be refundable, up to $1000. The lifetime learning credit is based on the first 20% of the first $10,000 of qualified expenses.
The Student Loan interest deduction is still limited to $2,500 per year.
The maximum Earned Income Credit for 3 children is $6,269 and $5,572 for 2 children.
The standard business mileage rate for 2016 is 54 cents per mile, medical and moving are 19 cents per mile and charity is 14 cents per mile.
Please note the IRS is delaying all refunds that include EIC until February 15, 2017. Please see page 2 for more information.
As with any tax law change, there are always exceptions to the rules. If you have any questions, regarding any of the new tax law changes, please call us at the office and we would be more than happy to answer them.
The IRS has put more responsibility on the tax preparers regarding due diligence. We have more paperwork to process while doing a tax return, in addition to asking more questions of our clients that may be redundant.
For those of you that qualify for Earned Income Credit, Child Tax Credit or the American Opportunity Credit (College tuition Credit), please make sure you have the following information readily available when you have your taxes prepared:
• 1098T College Tuition statement (cannot get credit without form)
• Child’s report card, medical records, child care provider record, or other documentation
Additional questions will be asked when your tax return is being prepared in-order to comply with the new rules implemented by the IRS. Thank you in advance for understanding the mandates that are put on us as we prepare your tax returns.
Every client of ours receives a copy of their return when it is prepared, and we’re adding a new feature this year. Each client will receive a CD with a PDF file of their tax return. We are hoping with this new addition you’ll be able to download the information to your computer and have your tax return readily available as needed. If an additional copy is needed throughout the year, the fee will be $15.
As always, we hope you’ve had a safe and healthy holiday season. We look forward to seeing you during tax season.