This Lake Minnetonka tax update involves a number of changes to take into consideration before filing your 2016 income tax returns. And despite the changes, overall there aren't too many variations in the preparation of your 2016 income tax returns compared to 2015. However, there are a few important considerations for you to take note of to make sure you're filing as accurately and efficiently as possible this year – especially if you're planning to get a tax refund.
One important Lake Minnetonka tax update of which to be aware is that taxpayers will have three extra days to file their returns this year. April 15th falls on a Saturday, and when that occurs the tax deadline is extended to the next business day, ordinarily Monday, April 17th. However, April 17th is the day the District of Columbia recognizes Emancipation Day. So the tax deadline will be Tuesday, April 18th.
The various tax deductions and filing rules are essentially the same as last year. The difference will be in the tax brackets, which were adjusted for inflation. So, as one CPA put it, don't necessarily assume that what you did last year can be relied on this year. Consult the tax tables carefully.
This Lake Minnetonka tax update addresses several changes to be aware of.
The mileage rate is lower. Tax regulations allow for tax advantages for using your personal vehicle for business, charitable, moving or medical purposes. You are able to deduct the actual costs involved, or use the mileage rate as prescribed by the IRS, whichever is greater. For 2016, the rate for business mileage is 54 cents per mile, 3.5 cents lower than it was in 2015. For medical or moving expenses, the rate is 19 cents per mile, down from 23 cents in 2015. The mileage rate for charitable purposes remains the same at 14 cents per mile.
There could be a delay in receiving your refund. If you are claiming the Earned Income Tax Credit or the Additional Child Tax Credit, expect your refund to be delayed in order to give the IRS more time to investigate errors and fraud in claiming these credits. Blame the delay on a new law, Protecting Americans from Tax Hikes, passed in 2015.
If you need help from the IRS, you will need an appointment. The IRS taxpayer assistance centers no longer accept walk-ins. Simply call in advance to make an appointment and help will be available.
Your income tax bracket may have changed. Income levels for all tax rates have been adjusted slightly to reflect the results of inflation. Consult the new tax tables.
Your personal exemption has been raised. In 2016, the personal exemption has been increased from $4,000 to $4,050. For taxpayers with an adjusted gross income of $259,400 for single filers and $311,300 for a married couple filing jointly, the exemption is less. The exemption is not available for taxpayers with an adjusted gross income of $381,900 filing as a single taxpayer and $433,800 for couples filing jointly.
You may get a larger Earned Income Tax Credit. Another Lake Minnetonka tax update is for taxpayers who have three or more children. The maximum credit for their 2016 income tax returns is $6,269, compared to $6,242 in 2015. The formula for the tax credit includes several factors, including income and the number of dependents.
You'll pay a larger penalty if you weren't covered by health insurance. If you don’t have health insurance, you’re going to be penalized – again – to the tune of $695 per adult and $347.50 for each minor child. Good news, though… the maximum household penalty is $2,085. Still, according to IRS officials, most families won’t actually owe the IRS any money, thanks to over 30 existing exemptions already in place.
If you won money in the Olympics or Paralympics, you may not have to pay taxes on the winnings. Normally, if you win money or prizes in a contest or a lottery, you have to pay taxes on those winnings. If your adjusted gross income is less than $1 million ($500,000 if married filing separately) you won’t have to pay taxes on your winnings from the Olympics or Paralympics. Thank Congress for a new law that was passed last year.
If you owe enough back taxes, you may lose your passport. The U.S. State Department now has the right to revoke your passport if you owe more than $50,000 in unpaid taxes. This is due to a 2015 transportation regulation called the FAST Act. Insiders say the IRS so far hasn’t provided back taxes information to the State Department, but expects to do so later this year. So, if you plan to travel abroad in the future, you better make sure you’ve paid your taxes.
You can find more articles pertaining to Lake Minnetonka taxes in the Taxes section of our site below Lake Minnetonka Real Estate Categories in the column to your right.
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