2016 Tax Form Changes – Part 1

The IRS has released on its website a number of draft tax forms and instructions for the 2016 tax year.
Here are some key changes made on the 2016 Form 1040 return:

*Due date.
Form 1040’s due date is April 18, 2017.

*Electronic Filing PIN.
To validate the signature on self-prepared, electronic tax return, taxpayers must use prior-year adjusted gross income or prior-year self-select PIN.

*Line 23 Educator expenses.
The up-to-$250 per educator deduction can include certain expenses for professional development courses related to the curriculum or to the students that the educator teaches.

*Line 26 Moving expenses.
The 2016 standard mileage rate for moving expenses is 19¢ per mile.

*Line 32 IRA deduction.
The statutory dollar limit is $5,500, plus an additional $1,000 for those age 50 or older.
If the taxpayer is an active plan participant, the deduction phases out over a specified dollar range of modified AGI.

*Line 40 Itemized deductions or standard deduction.
The standard deduction is $6,300 for single filers and for married filing separately, $12,600 for joint filers and qualifying widow(er)s, and $9,300 for head of household.

*Line 42 Exemptions.
The amount of each exemption for 2016 is $4,050. (Exemptions are reduced for taxpayers with AGIs in excess of the “applicable amount”.)

*Line 45 Alternative minimum tax.
The alternative minimum tax exemption amount for 2016 is $53,900 ($83,800 if married filing jointly or a qualifying widow(er); $41,900 if married filing separately). The AMT exemption amount is reduced if alternative minimum taxable income is above statutorily defined amounts.

*Line 54 Other credits.
The maximum adoption credit is $13,460 per eligible child. The amount begins to phase out if modified adjusted gross income (MAGI) is in excess certain amounts.

*Line 57 Self-employment tax.
The maximum amount of self-employment income subject to FICA tax is $118,500. There is no ceiling on Medicare wage base.

*Line 61 Health care.
As was the case in 2015, a taxpayer must either:

• Indicate that he, his spouse (if filing jointly) and his dependents had health care coverage throughout 2016
• Claim an exemption from the health care coverage requirement for some or all of 2016 and attach Form 8965
• Make a “shared responsibility payment” if, for any month in 2016, he, his spouse (if filing jointly) or his dependents did not have coverage and do not qualify for a coverage exemption.

The monthly penalty amount is equal to 1/12 of the greater of $695 per family member (up to a ceiling of $2,085) or 2.5% of the amount by which the taxpayer’s household income exceeds the filing threshold.

*Line 66 Earned income tax credit (EITC).
The maximum credit is higher, and the AGI-based phase-out figures are revised.

*Lines 74-77 Refund.
The IRS can’t issue refunds before February 15 (thus, before Feb. 15, 2017 for 2016 returns) for returns that claim the earned income credit and/or the additional child tax credit. This rule applies to the entire refund.

*Line 78 Amount you owe.
Cash is a new payment option for individuals. This option is provided through retail partners of the IRS and has a maximum of $1,000/day per transaction. To make a cash payment, a taxpayer must first be registered online at officialpayments.com/fed. There is a fee associated with this payment method.

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