With the New Year almost here that means several new tax changes are on the horizon. These changes are for 2016 and do not apply to the taxes you will be working on in the next few months before April’s deadline. However, it’s a good idea to know what to expect as the new tax year kicks off, because tax-preparation is really a year-round endeavor.
So let’s look at some of the most important tax changes for the coming year. First off, the deadline will be April 18 this year because April 15 falls on a federal holiday, Emancipation Day. So Monday April 18 is the day for most taxpayers, while for people in those states that celebrate Patriot Day the tax deadline will be April 19.
Another change to be aware of is that the tax penalties for not having health insurance, under the Affordable Car Act, will be increasing again. An adult will pay a $695 penalty for not having insurance or 2.5 percent of his or her income. There were will be a maximum amount a family has to pay but that amount will go up from $975 to $2,085 next year.
Tax brackets will be going up slightly in 2016. You can click here to see those brackets. If you file as head of household then your standard deductions are rising by $50. Likewise, personal exemptions are also increasing by $50 in 2016. Other changes include increased limits on health savings accounts, a slight increase in the earned income credit, and a $300 increase in the exemption from the Alternative Minimum Tax. Lastly, the estate tax exemption is also increasing, by $20,000.
As always GROCO will be there to help you make sense of all the tax changes this year and to make sure you understand how they will affect you. Just contact us for assistance at 1-877-CPA-2006 or click here.