7 Important Tax Law Changes in 2016

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As always, we publish this informations to help you. Yet we are NOT tax advisors. Please consult your tax professional for advice.

1. Three Extra Days – The tax filing deadline is delayed due to April 15 falling on a weekend and Emancipation day in Washington, DC. Returns may be filed until April 18, 2017. If you extend six months, the return will be due October 16, 2017.

2. Refund Delays – If you file early and claim the Earned Income Tax Credit (EITC) or Added Child Tax Credit (ACTC), the IRS must hold your refund until February 15. The first refunds for filers who claim these credits is expected to be the week of February 27.

3. Renewing Individual Taxpayer Identification Numbers (ITINs) – An ITIN is used by some taxpayers in place of a Social Security number. If it has not been used in three years or the middle digits are 78 or 79, the ITIN will expire. It may take up to 11 weeks to renew the ITIN. Taxpayers may contact the IRS Taxpayer Assistance Center (TAC) to obtain help in renewing their ITIN.

4. Olympic Medals – For 2016 Olympic and Paralympic winners with incomes of $1 million or less, their gold, silver or bronze medals and United States Olympic Committee (USOC) cash awards are not taxable.

5. ABLE Accounts – It is now possible to create a special account for persons who become disabled before age 26. Donors are permitted to make annual gifts with the current exclusion amount of $14,000 per year. While the gift does not qualify for an income tax deduction, the account may grow and distributions for a disabled person’s qualified expenses are tax-free.

6. Standard Mileage Rates – The IRS publishes mileage rates each year for business use, medical and moving travel and charitable travel. For 2016, the business use qualifies for $0.54 per mile, medical and moving expenses are $0.19 per mile and charitable travel is $0.14 per mile.

7. IRA Rollover Self-Certification – The normal IRA rollover limit is 60 days. Self-certification may enable you to have an extended period of time for an IRA rollover. In order to self-certify, you must fall into one of 11 specific categories. These include “a distribution check that was misplaced and never cashed, the taxpayer’s home was severely damaged, a family member died, the taxpayer or a family member was seriously ill, the taxpayer was incarcerated or restrictions were imposed by a foreign country.”

The IRS asks IRA owners to use a “trustee to trustee” transfer instead of the 60 day rollover. A trustee to trustee transfer avoids the risk of exceeding the 60 day limit.

In FS-2017-1 the IRS published a summary of seven tax changes.

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About Scott Stephens

I have been a licensed Realtor in North Orange County since 1994 and a hard working community leader, since buying my first home here, in 1988. Having been the recipient of many awards in both these areas of my life, I guarantee that you will love my service. "I'm Just Here to Help"
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