As the year winds to a close, the time for filing our taxes gets closer. As most people know, what you paid in 2015 does not usually equate to the amount you will pay in subsequent years. Tax laws change, and your personal circumstances may change as well. The effect is that your tax liabilities may increase or decrease.
5 Changes for the 2016 Tax Year
In 2016, there are several changes that taxpayers should be aware of. The following is an overview of five of the changes that will affect the most people:
- People who do not have insurance may face increased penalties. The Affordable Care Act requires individuals to get health insurance through government exchanges, on their own, or through their employers. If they do not, they face additional tax. The penalties for not having insurance more than tripled from calendar year 2014 to calendar year 2015. When taxpayers file their taxes in 2016, these penalties may apply.
- In 2016, employers are also now required to file certain forms relating to health insurance coverage. Form 1095-B must be filed by any employer that provides minimum essential coverage to an individual. Form 1095-C must be filed by all large employers covered under the Affordable Care Act that have an average of at least 50 employees or at least 50 full time equivalent employees as measured by their average hours worked during 2015. Some small employers may also have to file Form 1095-C if they are members of a controlled group.
- The official filing deadline for 2016 is April 18th instead of April 15th. This is because April 15, 2016, falls on an official District of Columbia holiday known as Emancipation Day.
- Filing deadlines for businesses and for those filing extensions have also changed. Partnerships, S-corporations, and other entities must now file their returns by the 15th day of the third month after the end of the tax year. C-corporations, however, have until the 15th day of the fourth month after the end of the tax year. This is a one-month deferral from previous years. In addition, taxpayers needing extensions will have new options for filings relating to partnership income, estate and trust affairs, and employee benefit plans.
- 2016 may also bring overall higher tax liabilities. The deduction levels for standard deductions as well as the income thresholds for each tax bracket change every year. In addition, unmarried individuals earning over $200,000 and married couples filing jointly with income over $250,000 will pay a 3.8% Medicare surcharge on investment income, which increases their capital gains tax rate from 20 percent to 23.8 percent.
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