Always prepare for filing changes one year ahead. That means getting educated on what’s to come and keeping tabs on documents, so you know how your tax refund may be affected. Each year, lawmakers tweak the terms for filing your taxes, but aren’t applicable until you file the next year. These 8 tax changes often consist of rises in caps, but also penalties. Read below for the most important ones. Again, the below tax changes for 2016 apply for 2017 filing.
As many Americans know, there are penalties for not having health insurance. The fees have risen this year, from $285 to $695 per adult, and from 2% to 2.5% above the filing limit. There will be a family maximum, but it is substantially higher than previous years at $2,085.
The change is small, 0.4%, but can steadily change your taxes. The classes are often adjusted for inflation, and we can expect to see a rise in coming years.
Standard deductions increase $50 to $9,300 for those who quality as head of household. Due to the low inflation rate, the IRS considers singles, married filing jointly or separately to be the same.
Another $50 boost, the amount taxpayers are entitled to for personal exemptions will now reach $4,050.
This boost will benefit those with children the most. For families with 3 or more qualifying kids, the maximum will rise $27 to $6,269. Having two qualifying children raises the maximum to $5,572, and one-child parents are entitled to a maximum $3,373 income credit. Childless individuals can claim up to $506, only a $3 increase.
An increase that will affect many, the AMT has changed. Single taxpayers can claim exemptions as high as $53,900, and joint filers can boost to $83,800.
The IRS ties the lifetime exemption for the gift and estate tax is to inflation, and it has been on the rise. The new exemption amount rose up $20,000 (from 2015) to $5.45 million. The limit applies to estates of those who pass away in 2016.
The small amount of inflation in our economy has had a great effect, changing some tax laws, and further rooting others. Contribution limits to 401(k) plans, IRAs, and flexible spending arrangements are all staying the same in 2016 as they were in 2015.
Now that you’re updated on the tax changes for 2016, file this away with your business expense receipts for 2016. So, get started filing for 2015. You’ve got T minus 6 weeks!
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