With tax season fast approaching there are several preparations and facts people should be aware of when filling out their tax returns. Many changes have occurred to how people file taxes with the implementation of the Affordable Care Act (ACA), but there are several other changes and tips to be aware of as well. We will guide you through new filing dates and new Federal laws that may affect how you file this year, in addition to tips for filing, how the ACA will affect your returns, tips for seniors and scams to watch out for when filing.
Important Tax Dates
There have been some changes to filing dates and deadlines for filing taxes this year. The biggest date change is the deadline to file your individual tax return has changed from April 15th to April 18th, this is due to Emancipation day falling on the 15th. If you live in Massachusetts or Maine this date has been pushed one more day to April 19th due to Patriots day. Other dates to keep in mind:
January 19– IRS will begin to accept electronic returns for individuals.
February 1– The last day companies have to send out W-2’s.
April 18– Due to a holiday falling on the traditional April 15th due date this is the 2016 deadline for individuals to file their personal taxes forms.
April 19– Because Patriot’s Day falls on the 18th of April, residents of Maine and Massachusetts have until this day to file individual tax returns.
June 15– U.S. citizens living abroad have until this day to file their taxes, the four-month extension needs to be filed by this date as well.
June 30– Citizens with foreign bank accounts exceeding $10,000 need to file a Foreign Bank Account Report by this date.
October 17– The final deadline for those who filed for an extension.
What You Need to File
Below we will discuss briefly some do’s and don’ts and tips on what you will need to file. It is always a good idea to stay organized. Especially if you are filing for multiple people or filing for a business as well. Making sure your math is correct before filing electronically or filling out forms. Many of us refer to our numbers from last year and that’s how it should be treated, as a reference. There could have been major life changes that occurred in the last year such as marriage or extreme health care costs, these will play a different role in this year’s filing. It is good practice to have all of your tax forms organized so when those sections come up you are ready to go. Knowing any income adjustments, you may have to make and deductions will speed the process up as well. If you have already paid some taxes for the year make sure to have those numbers so you do not overpay.
General Tax Changes & The ACA
There have been many changes to the tax system since the implementation of the ACA, a few that affect individuals are:
- For the 2016 filing season the deadline for individuals to file is April 18th.
- ACA penalties- For individuals who do not have health insurance in 2016 the penalty is calculated as per household income or per person. Currently the household percentage is 2.5% and per person the fee $695 per adult and $387 per child for a total maximum of $2,085.
- New limits to FSA contributions have been reduced from $5,000 to $2,500.
- Changes to the Earned Income Tax Credit and Additional Child Tax Credit
- Over the counter medicines are no longer considered medical expenses and cannot be deducted.
- Additional tax on HSA distributions
- Medical expenses became an itemized deduction in 2013, this threshold has increased from 7.5% to 10%.
New Federal Tax Laws
The passing of the Protecting Americans From Tax Hikes tax law (PATH ACT) was passed and involves those filing for Earned Income Tax Credit(EITC) and Additional Child Credit. For those filing for EITC they are no longer able to do so for previous years which a child did not have a Social Security Number. The IRS can now also stop an individual who has been filing for EITC for 10 years or more fraudulently. Filing EIC fraudulently now comes with a stiff fine.
Tips for Senior Citizens
When receiving Social Security benefit it can be hard knowing when you are to stop paying income tax. With a few tips for our aging community filing your taxes will be a breeze:
- Know your Social Security benefits- Usually Social Security benefits are not taxed, but if you receive an additional income outside of those benefits you will have to file.
- Be aware of the changes- Don’t assume that because you are receiving Social Security benefits that there haven’t been changes to how you need to file.
- Research additional tax credits that might be available to you.
- Receiving Social Security does not exempt you from local or state taxes.
- The IRS has volunteers to help senior citizens navigate their tax filing. This free service is excellent for those needing advice on how to file while receiving Social Security benefits. Additionally, getting the help form a tax consultant will make sure your tax return is filed correctly.