What’s New this year on Your 2015 Tax Return

Due to Washington D.C.’s Emancipation Day holiday on April 15th 2016, your filing Deadline for IRS Tax Returns 2016  will be on Monday, April 18th, not April 15th.  If you live in Maine or Massachusetts,  your filing deadline will be on April 19th, 2016.  Please note that April 18th will also be the deadline for filing an extension, paying the first installment of your estimated tax payments  for 2016, and  making any 2015 contributions in to your IRA.

New Forms

Tax day 2016 will involve a few important, perhaps unfamiliar forms. The 1095-B is from a health insurance provider or a smaller business with a self-insured health plan, and the 1095-C is issued by employers with 50 or more employees to describe an employee’s health coverage. Use them to find out if you qualify for any exemption from the individual mandate for health insurance or to figure out the cost of any penalty you owe.

Do you need to send them to the IRS?

You DO NOT. If you worked and received a 1095-C, just be sure to check the box on your tax return that confirms that you had health coverage for the full year. It is very similar to last year, with the minor  difference being that  employers are required to send the information returns. Since this is the  first year that employers will need to get an extension for these returns, many people will file their taxes without having their 1095-Cs. You will not  have to change your return if  you already filed your taxes.

Any tax advice for people who purchased health insurance through an exchange last year?

You might need to complete Form 8962 for the Health Premium Tax Credit if you claimed the credit in advance when you bought coverage. You might have claimed too little or too much when you signed up.

What about the penalty for people who did not have health coverage last year?

The penalty is higher than it was in 2014. This year, it’s the greater amount of 2% of household income above your filing threshold or $325 per person in your household (up to a max of $975). Next year it jumps even more, to a maximum of $695 per person and $2,085 per household.

What else has changed?

Because the income limits on cost-of-living adjustments may have changed, you cannot assume that you are eligible or ineligible for the same tax breaks that you would have received last year. For example, you may have qualified for a Roth IRA contribution this year, but not last year.

Additionally, the standard deduction ($12,600 for married couples filing jointly and $6,300 for single people) and the standard mileage rates for business use of your car (57.5 cents/mile) and medical or moving purposes (23 cents/mile) are all slightly higher in 2015.

Any surprises for investors completing their returns?

If you received a mutual fund distribution that you didn’t expect or a larger one than you expected, you have to pay taxes on it. You could also be responsible for paying  an additional 3.8% Medicare tax on net investment income. That would be the case if your modified adjusted gross income in 2015 was at least $250,000 for married couples filing jointly or $200,000 for single people.

Anything new for people getting refunds?

Yes, for the first time you can automatically invest all or part of your refund into what is called a myRA retirement account.  myRA is a new retirement savings account from the United States Department of Treasury, which is a simple, safe, and affordable way to start saving for retirement.  If you choose this option, you’ll need to fill out Form 8888.

There are a variety of minor changes this year, but nothing too major. Cohen & Burnett offers estate planning, fiduciary management, retirement planning, and tax preparation in and around Washington, D.C. All of our services are delivered by trusted legal professionals with the experience and specialization you require. To learn more about our services, please visit our homepage today.

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