Each year the rules regarding tax filing are changed. Sometimes those changes are small and affect very few people, other times they are large and affect everyone. To prepare you for this tax year we have listed 9 of the most notable changes that have been made.
- The Filing Deadline is April 18th
Since Emancipation Day falls on April 15th this year, the deadline for filing your taxes is extended until Monday, April 18th.
- Raises in Affordable Care Act Penalties
If you did not have sufficient health care coverage this year you will be responsible for paying certain penalties. This has been going on since the 2014 tax year, and each year the penalty has been raised significantly. For 2016, the penalty is $695 per person or 2.5% of your income. The penalty for families without proper health coverage has been raised to a $2,085 maximum. If you have not already obtained proper coverage for the 2016 year it may be something you want to put on the top of your to-do list since the penalties will be rising even higher next year.
- Slight Rise in Tax Brackets
There are several different tax brackets that taxpayers are grouped into. These are based on income levels. For 2016, these bracket amounts will be raised about 0.4%.
- Head of Household Standard Deduction is Raising
The deduction amount for someone filing as a head of household will be rising by $50 to $9,300 in 2016.
- A Rise in Personal Exemptions
The personal exemption amount is also going up by $50. So this means you can take a personal exemption of $4,050 this year.
- Health Saving Contribution Limits are Raising
Unfortunately, this raise will only apply for families, individual contribution limits will remain at $3,350. But the family contribution limit will rise by $100 to $6,750. The $1,000 catch up contribution for those aged 55 and older continue to remain in effect for this year.
- Earned Income Credit is Raising
In 2016, the Earned Income Credits available will be raising a little bit. People with three or more children will be able to take credit for $6,269, which is $27 more than last year. Taxpayers with 2 children will be able to take a credit of $5,572, which is $24 for than last year. Those with one child will be able to take a credit of $3,373, which is $14 more than last year. Taxpayers with no children will be able to take a credit of $506, which is $3 more than last year.
- The Alternative Minimum Tax exemption is raising
In 2016 single taxpayers will see a $300 raise in the AMT exemption, raising the amount to $53,900. Joint taxpayers will see a $500 raise, taking their exemption amount to $83,800.
- Raise in the Estate Tax Exemption
This year the estate tax exemption is raising another $20,000 to $5.45 million. This means that if you have a loved one that passed away during 2016 you will not have to pay estate taxes if their estate was under $5.45 million.