New Tax Laws That You Need To Know
Do you have your W2s, 1099s, charitable donations and other tax forms handy? Tax season is here, which means people all over the country are rummaging through drawers and piles of old receipts to file their 2015 taxes on time. Just as it happens every year, the IRS has made some changes to the tax laws for the 2016 filing season. Take a look at these changes and make sure that you, or whomever is preparing your returns this year, are fully aware of all the new tax laws for this year.
For the first time, those who didn’t have health insurance in 2016 will be hit with some big penalties. The penalty could reach as much as $2,085, but it can be avoided simply by obtaining a health plan within the first two months of 2016.
The personal exemption for this year is $50 higher than it was last year, estimated at $4,050. However, if you’re a higher-income earner, you no longer get this deduction. Plus, the standard deduction for head of household has increased this year as well.
Health Savings Accounts
If you’ve got a health savings account and a family, then you’re eligible to contribute up an additional $100 up to a maximum of $6,750. If you’re a single, then the amounts do not change at all, and the contribution remains maxed out at $3,350.
The big day itself has changed this year too. Since April 15 falls on a Friday, and a national holiday, the deadline has been extended to April 18. You get an additional three days to get your returns filed on time.
Earned Income Credit
The Earned Income Credit has gone up this year as well. It’s not much, but tax payers with three children can increase their credit by $27, which takes the total to $6,269. With two children, that amount is an additional $24, with a maximum of $5,572, and single-child households gain $14 more for a total of $3,373. If you don’t have any dependents, then your credit is an additional $3, getting you a total of $506.
There are a few tax breaks that were extended to be permanent. One of these is the Educator Expense Deduction, which lets teachers deduct up to $250 for classroom supplies that are not reimbursed. There is also an IRA charitable transfer clause that lets tax payers over the age of 70-and-a-half transfer up to $100,000 from an IRA to a charity tax-free.