2016’s Top Tax Issues

Fall is officially here, which means the next tax season is just around the corner!

Keeping that in mind, here’s a list of regulatory and legislative developments, tax issues, and other concerns that we’ll be sure to see in the upcoming year.

Supreme Court ruling on ACA

Millions will continue to have access to affordable healthcare in states that did not establish marketplace healthcare exchanges. Which leads into our next major tax issues below.

Affordable Care Act changes for individuals

The individual mandate penalty increases to the higher of 2% of yearly household income or $325 per person, per year, with a maximum penalty per family for those using this method of $975. Additionally, federal poverty level guidelines have increased.

ACA provisions’ impact on businesses

Applicable large employers who have on average 50 or more full-time equivalent employees in the prior calendar year must offer minimum coverage that is affordable to their FTEs and their dependents, or be subject to an employer shared responsibility payment.

New forms

The Form 1095-B and Form 1095-C, which were optional for calendar year 2014, must be filed by any person that provides minimum essential coverage to an individual (1095-B) and by applicable large employers (Form 1095-C) who had on average at least 50 full-time equivalent employees during calendar year 2014.

Increase in identity theft

Taxpayers may receive a letter when the IRS stops suspicious tax returns that have indications of involving identity theft but contain legitimate taxpayer’s name and/or Social Security number. The IRS has agreed to reverse its policy and provide identity theft victims with copies of fraudulent tax returns that have been filed under their name by scammers, so they can take the steps necessary to secure their personal information.

Extenders

Despite efforts to get ahead of schedule, Congress looks likely to wait until the last minute for extending things like the Section 179 deduction, the R&D credit, and others that expired at the end of 2014. If these aren’t extended, they are likely to make tax planning difficult, resulting in delays in tax forms and software releases.

Supreme Court ruling on same-sex marriage

All states now recognize all married couples in the same way for state income tax purposes, regardless of gender. This will impact the ability to file joint income tax returns, the ability to transfer property to each other tax-free, the ability to leave an estate to the spouse without gift tax implications, and spousal treatment of inherited IRAs.

Trade legislation tax changes

The Trade Preferences Extension Act of 2015 contains tax provisions in addition to its trade measures. Taxpayers who exclude foreign earned income under Code Section 911 cannot claim the child tax credit. Taxpayers must receive a payee statement (1098-T) before they can claim an American Opportunity, Hope, or Lifetime Learning Credit or take the deduction for qualified tuition and related expenses.

Proposed salary threshold for overtime pay

Under newly proposed rules, the Department of Labor would require most salaried workers earning less than $50,440 annually to be paid 1.5 times their normal pay for time worked beyond 40 hours.

New filing deadlines

In observance of Emancipation Day on Friday, April 15, 2016, taxpayers will have until April 18, 2016 to file their individual returns and make their first 2016 estimated tax payment. Additionally, taxpayers in both Maine and Massachusetts will have until April 19, 2016 to file their returns, in observance of Patriots Day on April 18.

Tangible property regulations

Under the final regulations, all costs that facilitate the acquisition or production of property must be capitalized. Additionally, improvements to property that better a unit, restore it, or adopt it to a new and different use must also be capitalized.

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