Tax Updates That Will Affect Your 2016 Federal Tax Returns

1)Tax Return Due Dates Have Changed – Individual tax return due dates remain the same (actual due date for 2016 individual returns is April 18, 2017).  Here are the due dates for the others (table courtesy of http://www.thetaxadviser.com/issues/2016/aug/nex-season-due-dates-have-new-logical-order.html):

March 15 (Extensions Until Sept. 15)

  • Form 1065, U.S. Return of Partnership Income; and
  • Form 1120S, U.S. Income Tax Return for an S Corporation.

Note: This is the due date for the tax return and also for the Schedules K-1 that the entity must provide to its owners.

April 15 (Extensions Until Oct. 15, Unless Noted Below)

  • Form 1040, U.S. Individual Income Tax Return;
  • Form 1041, U.S. Income Tax Return for Estates and Trusts (extensions until Sept. 30);
  • Form 1120, U.S. Corporation Income Tax Return (extensions until Sept. 15 until 2026, see note below); and
  • FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR) (any late filing penalty for a first-time filer may be waived).

http://www.thetaxadviser.com/issues/2016/aug/nex-season-due-dates-have-new-logical-order.htm

2) 2017 Tax Filing Season begins on January 23, 2017.  The IRS will begin accepting both e-filed and paper filed returns on this date.  Thus there is no advantage to paper filing any returns prior to this date versus waiting until the e-file system opens up.

3) For taxpayers eligible for the Earned Income Tax Credit (“EITC”) or the American Opportunity Credit (“AOTC”), refunds due to tax payers could be delayed at least until February 15.  This is a part of the IRS’s efforts to further prevent fraudulent tax filings.  

4) Also, the AOTC and the child tax credit will be subject to the same level of diligence as the EITC in the current year.  Thus there could additional information required by the taxpayers in order to get the AOTC and the child tax credit.

5) Changes in tax rates, standard deductions and personal exemptions are the following:  

For tax year 2016, the 39.6 percent tax rate affects single taxpayers whose income exceeds $415,050 ($466,950 for married taxpayers filing jointly), up from $413,200 and $464,850, respectively. The other marginal rates – 10, 15, 25, 28, 33 and 35 percent – and the related income tax thresholds for tax year 2016 are described in the revenue procedure.

The standard deduction for heads of household rises to $9,300 for tax year 2016, up from $9,250, for tax year 2015.The other standard deduction amounts for 2016 remain as they were for 2015:   $6,300 for singles and married persons filing separate returns and $12,600 for married couples filing jointly

Here is a nice summary of the tax brackets courtesy of fool.com (http://www.fool.com/retirement/2016/11/27/5-tax-changes-for-2017-youll-want-to-know-about.aspx)

Tax Rate Single Married, Filing Jointly Married, Filing Separately Head of Household 
10% $0 to $9,275 $0 to $18,550 $0 to $9,275 $0 to $13,250
15% $9,276 to $37,650 $18,551 to $75,300 $9,276 to $37,650 $13,251 to $50,400
25% $37,651 to $91,150 $75,301 to $151,900 $37,651 to $75,950 $50,401 to $130,150
28% $91,151 to $190,150 $151,901 to $231,450 $75,951 to $115,725 $130,151 to $210,800
33% $190,151 to $413,350 $231,451 to $413,350 $115,726 to $206,675 $210,801 to $413,350
35% $413,351 to $415,050 $413,351 to $466,950 $206,676 to $233,475 $413,351 to $441,000
39.6% $415,051+ $466,951+ $233,476+ $441,101+

6) 401(k) and 403(b) deadline for contributions in 2016 via payroll is December 31, 2016.  The deadline for contributions to an IRA is April 18, 2017.  These could be very beneficial and help lower your tax liability or increase refunds.