Noteworthy for 2016
- If you opted out of coverage for this year. The fine for no insurance has increased to $695 per adult ($347.50 for children) with a family ceiling of $2,085. The income based levy is 2.5% of household income over the threshold for filing a tax return. The uninsured will typically owe the higher of these two amounts when they file their 2016 return.
Don't Forget Your RMDs. Take required minimum distributions (RMDs) from your IRA or 401(k) plan (or other employer-sponsored retired plan) if you have reached age 701/2. Failure to take a required withdrawal can result in a penalty of 50% of the amount of the RMD not withdrawn.
- Charity. ALL deductions of any amount must have a receipt. Any individual contribution over $250 must also have an acknowledgement letter from the charity, and the letter must be dated by the date we file your return. The letter should include the date and the amount of any individual contribution over $250, and should also state that no goods or services were received in return for the contribution. Remember if you charge a charitable contribution to a credit card by 12/31/2016 we are able to deduct it in 2016.
- Mileage Reimbursement Rates for 2016. The optional standard mileage allowance for owned or leased autos (including vans, pickups or panel trucks) for business travel taking place in 2016 is .54¢ per mile. The 2016 rate for using a car to get medical care or in connection with a move that qualifies for the moving expense deduction is 19¢ per mile. The rate for using a car for 2016 charitable purposes remains at 14¢ per mile.
- With turbulence in the market this year... If you've got some losers you want to dump, consider selling them and taking your lumps. Capital losses you incur can offset your capital gains plus up to $3,000 of other income. Excess losses can be carried forward. Don't sell just for tax reasons. Any investment moves you decide on should always make economic sense, too.
- Mortgage Interest. We must obtain Form 1098 from you when you pay mortgage interest. Additionally, we must obtain refinancing closing statements, and if you drew money out on a home mortgage or refinancing we must have general information on the use of the money according to the IRS.
- Rental Property. If you own rental property, this year the IRS has demanded substantially more information. We now need, FOR EACH PROPERTY SEPARATELY, the physical location, the type of property (single-family, duplex, etc), and a record, by property of the number of days rented and the number of days used for personal purposes.
- Education Credits. The Tax Code now requires that the taxpayer has a Form 1098-T to claim any education credit. To prevent improper claims due to the refundable nature of a portion of the AOTC, additional criteria must be satisfied. We must ask additional questions about what and when you paid for education costs.
Iowa Tax Tips
- Military Personnel. Certain military pay has preferential treatment for Iowa income tax purposes.
- Pension Exemption. An exemption, up to $12,000 for married taxpayers and $6,000 for other filers, for certain kinds of retirement income is available to eligible Iowa taxpayers.
- Health & Long-Term Care Insurance. 100 percent of qualified premiums paid with after tax dollars may be deducted, even if you do not itemize deductions.
- Tuition & Textbook Credit. The credit is 25 percent for the first $1,000 paid for tuition, textbooks, and qualified extracurricular activities for each dependent attending an accredited elementary through secondary school in Iowa.
NOW IS THE TIME TO
YOUR 2016 TAXES!
Situations occur almost every day that can impact your income taxes. Waiting until 2017 is likely to mean missing tax saving opportunities that are only available until the end of 2016.
In 2016 did you have a significant income change; change your name or address; marry, divorce or live apart from your spouse; have or adopt a child; lose a spouse or a child; start or sell a business; purchase or sell business equipment or rental property; create a living trust; or receive any correspondence from the IRS?
Call today for a tax planning appointment. The sooner we meet, the more time we will have for tax saving action.