Highlights of 2016 Tax
| Mandatory Health Insurance Requirement: If a taxpayer or member of the taxpayer’s family had health coverage in 2016, the provider of the coverage is required to send an information form to the taxpayer. Any of the following forms you received is used for your tax return.
Form 1095-A: If you purchased health care insurance through the Marketplace for 2016, you should receive a Form 1095-A by the end of January 2017.
Form 1095-B: The insurance company providing the
coverage issues this form by March 2, 2017.
Form 1095-C: If you received coverage through an employer plan and the employer is an applicable large employer, the employer issues this form by March 2, 2017.
Minimum Essential Coverage penalty: $695.
Refund Delayed: The IRS cannot issue refunds before February 15, 2017, for returns that claim the Earned Income Credit and/or the Additional Child Tax Credit.
Itemized deduction and personal exemption limitation: Phase-out rule applies if adjusted gross income (AGI) exceeds $259,400 (Single), $311,300 (MFJ/QW), $285,350 (HOH), $155,650 (MFS).
Alternative Minimum Tax exemption: $53,900 for unmarried individuals and $83,800 for MFJ, and $41,900 for MFS.
Additional Medicare taxes:
0.9% additional Medicare Tax on wages and net self-employment income exceeding $250,000 (MFJ), $125,000 (MFS), or $200,000 (any other filing status).
3.8% additional Medicare Tax on net investment income exceeding $250,000 (MFJ), $125,000 (MFS), or $200,000 (any other filing status).
Q&As for Additional Medicare Tax
AGI floor for Medical Expense: The AGI floor is 10% if you and your spouse are under age 65. If either you or your spouse is age 65 or older, AGI floor is still 7.5%. Starting 2017, the rate will be 10% only.
Social Security and Medicare taxes: Maximum earnings
subject to Social Security tax for 2016 is $118,500 and max tax amount for employee’s portion is $7,347. No earnings limit for Medicare tax.
IRA and Roth IRA contribution limits: For 2016, $5,500 ($6,500 for those age 50 or older).
IRA Rollover: Beginning 2015, a taxpayer can make only one rollover from an IRA to another (or the same) IRA in any oneyear period regardless of the number of IRAs owned.
Tax rates on long-term capital gain and qualified dividend income: 0% for taxpayers with 10% or 15% tax bracket; 15% for taxpayers with 25% to rate below 39.6% bracket; 20% for taxpayers with 39.6% bracket.
Brokerage Form 1099 due is Feb 15: Your brokerage company will issue Form 1099 by February 15.
Find Statement K-1 of Publicly Traded Partnership: You can find your K-1 online at http://taxpackagesupport.com/.
| Standard mileage rates:
54.0 cents per mile for business;
19.0 cents per mile for medical and moving; and
14.0 cents per mile for charitable volunteers.
(Rate for business includes 24.0 cents of depreciation.)
Tax Extender Bill (PATH Act of 2015):
The following tax provisions are now permanent.
State and local general sales taxes
Additional child tax credit
American Opportunity Credit
Charitable contributions of IRA distributions
Section 179 expense deduction
Leasehold & retail improvement and restaurant property
Tax provisions extended through 2019
Work Opportunity Credit
Tax provisions extended through 2016
Cancellation of qualified principal residence debt
Mortgage insurance premium deduction
Tuition and fees deduction
Non-business energy property credit
Form 1098-T for Education Tax benefits: A taxpayer cannot claim an education credit or deduction unless the taxpayer receives Form 1098-T, Tuition Statement, from the educational institution.
Annual exclusion for gifts: Per-donee exclusion for gifts of present interests is $14,000.
Health Savings Account contribution limits:
Self-only, under age 55: $3,350.
Self-only, age 55 and older: $4,350.
Family, under age 55: $6,750.
Family, age 55 and older: $7,750.
Foreign earned income exclusion: $101,300 for 2016.
Foreign Account Reporting Requirements (new due date for FinCEN Form 114):
FinCEN Report 114, replacing TD F 90-22.1 Each US person who has a financial interest in or signature authority over any foreign bank and financial accounts that exceed $10,000 in aggregate value in any time during the calendar year must report to Dept of Treasury by April 15 of the succeeding year. You need to e-file this form at http://bsaefiling.fincen.treas.gov/main.html.
Form 8938 must be filed with your tax return if you hold any interest in a specified foreign financial asset and the aggregate value of all those assets exceeds $50,000. Be careful: penalty on non-filing is at least $10,000.
All Charitable Contributions require evidence: IRS is very strict with substantiation requirement for charitable contribution deduction. IRS disallows deductions for any contribution of $250 or more unless the taxpayer substantiates the contribution by a contemporaneous written acknowledgement of the contribution by the donee organization.
Recordkeeping: Keeping well-organized tax record. Especially, many taxpayers tend to forget keeping business mileage logs if used their cars for business, required by IRS.