Friday, September 30, 2016

Tax Deadline for individuals is October 17

IRS Reminds Extension Filers of the Oct. 17 Deadline
Millions of taxpayers ask for an extra six months to file their taxes every year. If you are one of them, then you should know that Monday, Oct. 17 is the extension deadline in 2016. This is so because Oct. 15 falls on a Saturday. If you have not yet filed, here are some things to keep in mind about the extension deadline and your taxes:
  • Try IRS Free File or e-file. You can still e-file your tax return for free through IRS Free File. The program is available only on through Oct. 17. IRS e-file is easy, safe and the most accurate way to file your taxes.
  • Use Direct Deposit. If you are due a refund, the fastest way to get it is to combine direct deposit and e-file. Direct deposit has a proven track record; eight out of 10 taxpayers who get a refund choose it.
  • Use IRS Online Payment Options. If you owe taxes, the best way to pay them is with IRS Direct Pay. It’s the simple, quick and free way to pay from your checking or savings account. You also have other online payment options. Check them out by clicking on the “Payments” tab on the home page.
  • Refunds. As you prepare to file your 2015 return, keep in mind next year’s taxes. IRS is urging taxpayers to check their tax withholding as the year winds down. New factors may delay tax refunds in 2017. For more on what you can do now, see our Aug. 31 news release.
  • Don’t Overlook Tax Benefits. Be sure to claim all the tax breaks you are entitled to. These may include the Earned Income Tax Credit and the Saver’s Credit. The American Opportunity Tax Credit can help offset college costs.
  • Keep a Copy of Your Return. Be sure to keep a copy of your tax return and supporting documents for at least three years. Among other things, this will make filing next year’s return easier. When you e-file your 2016 return, for example, you will often need the adjusted gross income (AGI) amount from your 2015 return.
  • File On Time. If you owe taxes, file on time to avoid a potential late filing penalty. If you owe and can’t pay all of your taxes, pay as much as you can to reduce interest and penalties for late payment. You might also consider aninstallment agreement where you can pay over time.
  • More Time for the Military. Military members and those serving in a combat zone generally get more time to file. If this applies to you, you typically have until at least 180 days after you leave the combat zone to both file returns and pay any taxes due.
  • More Time in Disaster Areas. If you have an extension and live or work in a disaster area, you often have more time to file. Currently, taxpayers in parts of Louisiana and West Virginia have additional extensions beyond Oct. 17. See the disaster relief page on for details.
  • Try Easy-to-Use Tools on Use the EITC Assistant to see if you’re eligible for the credit. Use theInteractive Tax Assistant tool to get answers to common tax questions. The IRS Tax Map gives you a single point to get tax law information by subject.

Monday, September 19, 2016

Tax Brackets Expected to Rise Slightly Next Year

Inflation-adjusted tax brackets are anticipated to go up a bit next year, according to a pair of new reports, but that could reduce the tax burden for many taxpayers.
According to one report, from Thomson Reuters, the basic standard deduction for heads of household, the additional deduction, and the exemption amounts, will increase to $4,050. The starting point for phasing out taxpayers’ personal exemptions is expected to range from $313,800 for spouses filing jointly and surviving spouses, and $287,650 for heads of household, to $261,500 for single taxpayers. Similar higher dollar thresholds are expected to apply to the phaseout of itemized deductions.
In contrast, this year, phaseouts began at $311,300 of adjusted gross income for joint filers, $285,350 for heads of household, and $259,400 for singles. The higher phaseout levels prevent inflation from eating into the value of these deductions.

A report, from Bloomberg BNA, predicts the top 39.6 percent tax bracket will begin at $470,700 for married taxpayers filing joint returns and at $418,400 for unmarried individuals. This represents an increase from $466,950 and $415,050, respectively in 2016.

Bloomberg BNA predicts that in 2017, the personal exemption amount will stay unchanged from 2016 at $4,050. It is phased out for high-income taxpayers. When calculating deductions, taxpayers can decide to take the higher of their itemized deductions or the standard deduction. The standard deduction amount will differ, depending on the taxpayer’s filing status. The standard deduction amounts for 2017 are projected to increase slightly from 2016.
Standard Deduction

Alternative Minimum Tax
For some taxpayers, inflation adjustments will influence whether they need to pay the alternative minimum tax or not. The projected AMT exemptions for 2017 are as follows:

Estate and Gift Tax Exclusions
Bloomberg BNA anticipates the estate tax basic exclusion for people who die next year will be $5.49 million.
The exclusion amount was $5.45 million this year. The annual gift tax exclusion will still be $14,000 in 2017.
Tax Preparer Penalties
Bloomberg BNA also has predictions for tax preparer penalty amounts, adjusted for inflation next year: