By Andy Frye
As usual, in "tax world" we are one year behind, so when we talk about 2016 tax changes we mean changes that will affect your 2016 tax return…which you will be preparing right here in calendar year 2017.
So, now that we have that out of the way:
2016 brings a large variety of tax changes and let's delve right into them, strap on your helmet please, it could be a wild ride:
Tax Preparers Under a Microscope
It's important for you to understand, as a taxpayer, that the IRS is subjecting tax preparers to more and more scrutiny.
If you are working with a "shady" tax preparer, now may be the time to exit stage left, because the IRS is targeting shady tax preparers for extinction.
Here are just a few new rules IRS has put in affecting professional tax preparers:
The IRS has a new education program for tax professionals called the IRS Annual Filing Season Program (AFSP).
Part of this program is that, as of January 1, 2016, an unenrolled preparer (meaning not a CPA or EA) can no longer represent clients before the IRS at all, even with respect to a tax return that the preparer both prepared and signed. This can severely restrict your tax preparer's ability to contact the IRS on your behalf.
At Pronto, we have multiple AFSP and EAs so it is not an issue if you are a Pronto Client, but it's something to be aware of for taxpayers who are attending tax preparers who have not completed the AFSP program with IRS.
Unless your tax preparer completed the voluntary AFSP program, you could be left "all alone" in the event of an IRS audit.
New Tax Preparer Penalties
And then there are the new and extremely expensive penalties that the IRS has instituted on tax preparers.
New for this year, both the Child Tax Credit (including the Additional Child Tax Credit) and the American Opportunity Credit have "program integrity provisions," including $500+ per incident penalties that can be assessed to tax preparers who don't perform due diligence when claiming these credits for clients.
A tax return containing an Earned Income Credit, a Child Tax Credit, and an American Opportunity Credit now gives a tax preparer an opportunity to be fined $1,500 or more if the tax preparer doesn't use due diligence when claiming those credits.
Taxpayers can also get in trouble for incorrectly claiming these credits, including:
The Child Tax Credit rules are now very similar to EIC rules, including:
n Taxpayers who incorrectly claim credit can be barred from claiming the credit in future years
n New due diligence requirements for professional tax preparers, including potential $500+ tax preparer fines
n You cannot claim the American Opportunity Tax credit without including the Employer Identification Number of the qualifying educational institution and a proper 1098-T from that institution.
2016 Numbers to Know
The 2016 Exemption Allowance is $4,050, up from $4,000 in 2015.
Standard Deduction Amounts
|Filing Status||Standard Deduction|
|Joint & Qualifying Widow(er)||$12,600*|
|Head of Household||$9,300*|
|Single & Married Filing Separately||$6,300*|
*Additional standard deduction amounts for those at least 65 and/or blind:
Joint & QW $1,250
All others $1,550
The Head of Household standard deduction, then, is the only one that went up from 2015.
Retirement Plans & Pensions
The maximum deductible contribution to an Individual Retirement Arrangement (IRA) stays at $5,500 per taxpayer for 2016, no increase from 2015, with a $1,000 "catch-up contribution" for any taxpayer age 50 or over. This $5,500 limit applies to both Traditional and Roth IRAs.
The contribution limit for 401K, 403b, and other elective deferral qualified retirement plans stays $18,000 in 2016, with an additional $6,000 catch-up contribution allowed for taxpayers age 50 or over.
Contribution limit for SEP IRAs stays at $53,000 for 2016, with no additional catch-up contribution allowed for SEP IRAs.
One new development for 2016 in the area of retirement taxes: the arrival of final tax law regulations regarding "Qualified Longevity Annuity Contracts," or QLACs.
As people live to more and more advanced ages, with some pundits claiming that immortality will be possible sometime soon, the insurance companies have set up this QLAC annuity to protect against "outliving your money." This product, like other annuities, is a contract from an insurance company stating that if you give the insurance company XYZ money, the insurance company will pay you a lifetime income starting at XYZ age, as specified in the annuity contract.
While the QLAC product itself is not new, the finalized tax treatment of this type of annuity is now much more favorable to the taxpayer: specifically, the new tax law does not force Required Minimum Distributions (RMDs) for monies placed into this type of annuity.
The lack of a required distribution makes it possible for a taxpayer to "stash" money in the QLAC and protect that money from the taxes that would apply to the normally required retirement plan distribution. The QLAC can therefore serve as a powerful tax planning tool for some taxpayers who have large IRA account balances and could face heavy taxes should those IRAs be forced into distribution as would normally be required…if that makes any sense to you, congratulations, you're officially a Tax Geek.
In order to qualify as a QLAC, certain rules apply, including.
Here is a good link to the new QLAC rules if you're interested in such things.
Earned Income Credit
The Earned Income Credit remains the largest anti-poverty program conducted by the federal government.
For 2016, in order to qualify for the Earned Income Credit (EIC for short), the earned income and adjusted gross income (AGI) of the taxpayer(s) must both be less than:
|If filing...||Qualifying Children Claimed|
|Zero||One||Two||Three or more|
|Single, Head of Household or Widowed||$14,880||$39,296||$44,648||$47,955|
|Married Filing Jointly||$20,430||$44,846||$50,198||$53,505|
New for 2016 tax year on the EIC front: no tax refunds from tax returns containing the Earned Income Credit or Additional Tax Credit will be issued before February 15th.
Repeat: tax refunds related to EIC and Additional Child Tax Credit will be delayed until February 15th at the earliest.
Tax year 2016 maximum Earned Income Credit amounts:
|Number of Qualifying Children|
|0||1||2||3 or More|
Investment income must be $3,400 or less for the year in order for taxpayer to qualify for EIC.
New Rules (Again) for ITINs
The IRS has been making a lot of changes to the ITIN program over the past few years—it has been a challenge to keep up.
Here's a link to the ITIN program changes that were made in 2014. These changes created an expiration date (five years from issuance) for ITINs, along with other reasons why an ITIN could be "deactivated" by IRS, stricter requirements for submitting identity documents when obtaining an ITIN, and a general tightening up of the ITIN application process.
Here is a link that explains the "current state" of the many, many changes to the ITIN program.
2016 is the first year that the IRS will send letters to taxpayers whose ITINs are considered expired; these taxpayer would then need to reapply for their ITINs.
Here's a link to the ITIN Frequently Asked Questions page, which contains all the latest information, and will definitely challenge your reading comprehension skills.
Social Security Wage Base
For 2016, the "wage base" for Social Security tax stays at $118,500, no increase from 2015. Beyond $118,500 of earnings, the taxpayer does not have to pay any more Social Security tax on his or her earnings.
Medicare tax however does still apply to all earnings regardless of the amount.
Alternative Minimum Tax
The Alternative Minimum Tax exemption now adjusts for inflation each year.
The indexing of the AMT to inflation has greatly reduced the number of taxpayers afflicted by AMT not only now but far into the future, as described in this informative TaxPolicyCenter.org article about AMT.
The "signature" piece of legislation for tax year 2016 is the Protecting Americans from Tax Hikes Act of 2015, or PATH Act. We would have to give it to the politicians on this one as far as the euphemistic phrasing of this law, they really outdid themselves this time. And, in truth, this law does contain a lot of "good news" for many different taxpayers.
The PATH Act thus provides a certain degree of stability to tax law.
Tax Breaks Made Permanent
The PATH Act made certain popular tax breaks permanent, including:
n The option to deduct sales tax on Schedule A. For taxpayers filing tax returns in states that have no income tax, the ability to deduct sales tax is a nice bonus.
n The $250 above-the-line deduction for teacher expenses.
Tax Breaks Extended Temporarily
Mortgage Insurance Deduction
The mortgage insurance deduction on Schedule A has been extended through 2016, allowing taxpayers to deduct mortgage insurance (a.k.a. "PMI") in the same manner as mortgage interest. Taxpayers who have FHA home loans particularly benefit from this deduction. However, strict income limits apply to this deduction, so you will definitely see taxpayers who pay this expense but see the deduction disallowed.
Energy Efficiency Tax Credits
Also extended through 2016, the Residential Energy Property Credit. This credit, claimed on Form 5695, gives the taxpayer a 10% credit on the cost of certain energy-efficient roofing, heating and air-conditioning, insulation, windows, and doors. The credit has a lifetime cap of $500 and can only be used for taxpayer's principal residence.
The Residential Energy Efficient Property Credit, meanwhile, has been extended through 2021. This credit is good for 30% of the cost of certain energy-efficient property, including qualified equipment includes solar hot water heaters, solar electric equipment and wind turbines. This credit is also claimed on Form 5695.
Mortgage Forgiveness / Canceled Debt
Remember the real estate crash of 2007-2010, when millions upon millions of people went "underwater" on their mortgages relative to their property value and this created a rash of foreclosures, short sales, and massive amounts of "phantom income" reported on Form 1099-C?
Seems like a distant memory, seeing as the real estate market has been on fire for the past five years. Some people claim another crash in real estate values is imminent but the only thing many areas have seen for numerous years now has been continuous real estate price increases, year after year, spurred along by historically low mortgage rates. Here in Los Angeles, we've got 800 square feet falling down shacks that cost upwards of a million dollars, with many Angelenos paying more than 50% of their gross income just for housing cost.
Nevertheless, despite the rising real estate market, there are still some taxpayers who worked out property problems in 2016 through either a foreclosure or short sale. These taxpayers, who often receive 1099-C forms with horrifying amounts on them, will be happy to know that the mortgage debt forgiveness provision has been extended through 2017.
This law allows qualified taxpayers to avoid paying income tax on canceled debt related to their principal residence and is a really big deal for taxpayers holding a 1099-C related to their main home.
Business Tax Changes
Taxpayers who own businesses have quite a few important changes to be aware of for tax year 2016. Here are some highlights:
Research and Development Credit
The Research & Development Credit has now been made permanent.
Notably, the credit now can be used to offset not only regular tax but AMT, too, and the definition of "research and development" has also been expanded.
Exclusion of Gain from Sale of Certain Small Business Stock
Are you familiar with the Section 1202 100% exclusion of gain on the sale of certain small business stock? This is another juicy loophole that has now been made permanent and may apply to some of your business clients or investors.
Essentially, this tax break allows certain business owners (a category that includes investors) to completely avoid tax on long-term capital gains related to sale of stock in certain corporations; you can read up on the rules here (note, must be stock held in a C-corporation, S-corp and LLC do not qualify).
Angel investors and venture capitalists love this tax break, as do the entreprenuers seeking to get money from angel investors and venture capitalists.
Work Opportunity Tax Credit
The Work Opportunity Tax Credit (WOTC), another one of those credits that's always expiring and then being retroactively extended, has been extended through 2019.
This large tax credit, which has a large number of confusing rules attached to it, can result in significant savings for small business owners who hire people from certain "targeted groups."
Targeted groups include:
n Recipients of food stamps
n Residents of certain designed neighborhoods
n Young people who work summer jobs
Here is a link to the full Work Opportunity Tax Credit guide for employers.
The credit is paid as a percentage of wages. In most cases, it's 40% of the first $6,000 in wages. Maximum credit, however, goes all the way up to $9,600.
Here is a link to the details of how this credit is calculated.
New for 2016, "long-term unemployed" has been added to the list of targeted groups for Work Opportunity Credit, effective for employees beginning work after December 31, 2015. "Long-term unemployed" is defined as someone who's unemployed for at least 27 weeks before being hired.
Section 179 Limits
Section 179 allows business owners to expense certain deductions that normally would need to be depreciated / deducted over time.
The PATH Act made the Section 179 $500,000 limit permanent.
The Section 179 investment limit of $2 million was also made permanent.
Also clarified in the PATH Act: investments in software, in leasehold improvements (for instance, installing fixtures in a retail store), and in heating and air-conditioning units all qualify for Section 179 treatment.
Bonus depreciation of 50% has been extended through 2017, allowing another way in addition to Section 179 for business owners to "accelerate" deductions that otherwise would need to be depreciated over time.
The idea is to encourage capital expenditures by means of these accelerated deductions.
Changes to Tax Filing Deadlines
Did you hear the rumor about the IRS moving around a bunch of important tax deadlines that have large penalties attached to them if taxpayers don't meet the deadlines?
That rumor is entirely true.
Here's a summary of important tax deadline changes new for tax year 2016:
Partnership Tax Filing Deadline Changed
The partnership tax return deadline used to be April 15, now it's March 15. If you have a fiscal year partnership, deadline is now three months from end of year, rather than the previous four months.
C-Corporation Tax Filing Deadline Changed
C-corporation filing deadline was March 15 but now it's April 15. Same idea as with partnerships, too, if the corp has a fiscal year, due date is now four months from end of fiscal year rather than the previous three months. S-corporation deadline stays March 15.
FBAR Deadline Changed
Foreign Bank Account Reporting (FBAR) filing deadline is now April 15 instead of June 30. FBAR is required for any taxpayer with accounts in foreign countries that, when totaled all together, add up to $10,000 or more at any time during the year. Non-filing and late filing penalties related to FBAR are brutal, so be advised of the new due date.
IRS has added an ability to file an extension for the FBAR, though, so that provides some breathing room for taxpayers with FBAR obligations.
Don't Be a Victim to Sneaky New Tax Deadlines
I tell you what, these late filing penalties can get really heavy really quickly, some people might even think that changing the tax filing deadlines is a great way for the government to generate extra income without having to raise taxes in a more direct way. I mean that's not what I would say, of course, but I'm just saying some people would say that. You know how some people are with the things that they say.
Imagine a partnership tax return, for instance, with four partners; just one month late filing and you're looking at an IRS penalty of $195 x 4 = $780…or imagine, too, an FBAR filer who thinks the deadline is still June 30 but now the deadline is April 15 and now the late filing penalty is $30,000…
Not a good look!
Therefore, here's a link to a handy chart of the new filing deadlines, courtesy of our friends at the American Institute of Certified Public Accountants (AICPA).
IRS Staffing Levels
Much has been made in recent years of huge budget cuts at IRS and the consequences thereof, such as the IRS not answering the phone approximately 8 million times in one year and all-time lows in terms of audit percentages.
As you likely noticed, the IRS showed some improvement for 2016, raising its percentage of taxpayer calls that actually got answered from 38% to 70% and eliciting left-handed compliments like this headline from the Washington Post:
Constant Scams & Hacking
Possibly the biggest story of 2016 in Tax World is the constant scams and hacking impacting every corner of the industry.
Here's a quick list of some of the scams & hacks that have hit over the past 24 months:
n IP PIN problems caused by hackers.
n IRS Get Transcripts Tool crippled by hackers. The IRS Get Transcripts Tool is now back online, but it was down for quite a while related to hacking.
n Phone calls from criminals claiming that taxpayers owe a "Federal Student Debt Tax."
n A wide variety of scams targeting tax preparers, including a scheme where criminals actually log in remotely to the database of the tax professional and file fraudulent returns on behalf of taxpayers, direct depositing the refunds into their own accounts.
n Scammers even tried to use the mass shooting in Orlando as an excuse to rip people off
And these are the scams we know about!
Of course these scams are in addition to pervasive identity theft problems and the ubiquitous, horrible telephone scam that has been perpetrated against millions of taxpayers wherein thieves and bullies have been calling millions of taxpayers and impersonating IRS collections agents and threatening to come to taxpayers' homes and places of business and seize assets unless taxpayers cough up money to these filthy and despicable phone-jockey thieves.
This telephone scam has affected MILLIONS of taxpayers!
Kudos to the IRS, they finally caught these phone scammers, and shut down their operation.
Still, stuff is really, really wild right now with regard to scams and hacking.
Be careful, for sure.
Audit Focus Areas
The Inspector General of the Treasury has a suggestion for the IRS:
The Treasury Inspector General report released in late 2015 states that the IRS spends too much time auditing taxpayers with incomes of $200,000 - $400,000 and should focus more efforts on super-wealthy taxpayers because, well, because there's more money to be had there.
It remains to be seen whether IRS will take that advice.
New for 2016, the IRS has also increased audits of partnership tax returns, which have historically enjoyed extremely low audit rates.
IRS Payment Options
The IRS has now partnered with 7-11 to allow you to pay your taxes in cash at 7-11. No, seriously, we're serious: it's real. Pick me up a six-pack while you're there, will you?
And then there's IRS Direct Pay, the efficient, convenient new online payment system where you can pay your taxes electronically without having to hassle with setting up an account, forgetting your password, trying to reset your password, not being able to reset your password because you can't remember the name of your first pet, punching yourself in the face, and then going to 7-11 to pay your taxes in cash and get a six pack.
Have you used the IRS Direct Pay system?
It's really slick and convenient…when it works.
Affordable Care Act Updates
Oh yeah, and then there is that whole ObamaCare Thing. Without a doubt, no modern tax update would be complete without a review of the Affordable Care Act.
In terms of the big picture, the Affordable Care Act appears to be at a pivotal moment, as Mr. Obama prepares to exit the Office of the Presidency.
In some ways, the law has been a big success, increasing the percentage of people who have health insurance, enabling people who were previously "uninsurable" to obtain insurance, and other benefits.
At the same time, numerous insurance companies have started pulling out of the state run exchanges, claiming they're not able to make money and prompting headlines like this one:
President-Elect Donald Trump says he will repeal and replace ObamaCare.
For the time being, though, it's the law of the land—so let's take a look at how it will impact 2016 tax returns.
More Paperwork, Compliance Monitoring, Information Matching
This past tax season, if you recall, was the first one where Forms 1095 were required.
So that right there created a lot of new and sometimes confusing paperwork.
The Form 1095, recall, is an "information return" filed by the taxpayer's employer, the marketplace exchange, or the insurance company, showing the amount of premiums paid by the taxpayer, the amount of Premium Tax Credit received, and other data that you need to plug into the tax return.
If you haven't yet built in the question "Where's your 1095?" into your tax preparation interview process, now is the time, because if you file returns without the information on that form, your clients will experienced delayed refunds and receive IRS letters.
Oh yes, the IRS has increased diligence with regard to Premium Tax Credit audits and other ACA-related tax issues.
The fact that it's often difficult for the taxpayer to locate his or her Form 1095 has not exactly sped up the tax preparation process.
Many taxpayers, accustomed to receiving reams of meaningless and unintelligible "bad news" mail from their health insurance company—"your premium will go up by 20 percent, again, effective tomorrow"—accidentally throw away Form 1095 and then have to contact the insurance company or marketplace exchange to get a copy.
Not sure about you but I love calling my health insurance company, they always answer my call in a timely way, with accurate information that makes me happy to be a customer!
Ugly Situations with Regard to Premium Tax Credit Repayment
One thing that we saw a fair amount of last tax season and will see more of this year:
Ugly Situations with Regard to Premium Tax Credit Repayment.
Basically what happens on these is the taxpayer goes on the health insurance exchange, reports her income from the previous year, and qualifies for a large Premium Tax Credit. And that credit is then paid to the insurance company, reducing the "net premium" that the taxpayer has to pay during the year, and everyone is happy.
Meanwhile, the taxpayer goes and gets a better job, that pays more money.
The taxpayer then does not "report a life event" (getting a better job, that pays more) as taxpayers are instructed to do in IRS Publication 5121.
The end of the story, then, entails many taxpayers ending up in an "overpaid" situation with regard to the Premium Tax Credit, i.e. they received more Premium Tax Credit than they were supposed to receive, and now that their income went up (or another "life event" occurred to decrease their PTC), they have to pay back the excess PTC on the 2016 tax return.
Often, these are not small numbers—people can end up paying back $3,000 or more worth of overpaid Premium Tax Credit.
Increased Penalty Amounts
The penalty for not having health insurance has increased substantially in 2016, to either $695 per person or 2.5% of the taxpayer's Modified Adjusted Gross Income (MAGI), whichever is greater.
Exemptions to No Health Insurance Penalty
In this environment of greatly increased consequences for non-compliance with the Affordable Care Act, your tax preparer's knowledge of exemptions to the penalty is as good as gold, and here at Pronto we have spent a lot of time learning about all the various exemptions.
Here, as documented at this Healthcare.gov link, are the major exceptions to the rule that you must either have had insurance in 2016 or pay a penalty:
- You're uninsured for less than 2 months of the year
- The lowest-priced coverage available to you would cost more than 8% of your household income
- You don't have to file a tax return because your income is too low (learn about the filing limit.)
- You're a member of a federally recognized tribe or eligible for services through an Indian Health Services provider
- You're a member of a recognized health care sharing ministry
- You're a member of a recognized religious sect with religious objections to insurance, including Social Security and Medicare
- You're incarcerated, and not awaiting the disposition of charges against you
- You're not lawfully present in the U.S.
In addition to these exemptions from the penalty, there are also a variety of "hardship exemptions," as follows:
- You were homeless.
- You were evicted in the past 6 months or were facing eviction or foreclosure.
- You received a shut-off notice from a utility company.
- You recently experienced domestic violence.
- You recently experienced the death of a close family member.
- You experienced a fire, flood, or other natural or human-caused disaster that caused substantial damage to your property.
- You filed for bankruptcy in the last 6 months.
And the list goes on…and on.
The IRS has released a one-page Publication 5172 showing the different exemptions through which a taxpayer may avoid paying the penalty.
2017 Open Enrollment Period
One last bit of ObamaCare news for you: the Open Enrollment Period for Affordable Care Act insurance plans is November 1, 2016 – January 31, 2017.
An open enrollment period close date of January 31 virtually guarantees that by the time a taxpayer sits down to do a 2016 tax return, the uninsured taxpayer may not only be hit with a penalty for 2016, but may already be "in the penalty zone" for 2017—with no quick or easy option to get signed up and avoid the 2017 penalty because Open Enrollment ended yesterday…
Standard Mileage Rates and Other Miscellaneous Items
OK Team, we are getting close to the end of this year's federal tax update, so let's quickly hit on some of the miscellaneous items that we know you'll want to know:
- 54 cents per mile for business miles driven (a decrease from the 57.5 cents per mile rate for 2015).
- 19 cents per mile for medical or moving purposes (a decrease from the 23 cents rate for 2015).
- 14 cents per mile for charitable purposes (same as 2015).
The maximum Adoption Credit for 2016 is $13,460 and the credit remains a non-refundable credit. Don't forget about the loophole allowing parents who adopt a special needs child to claim the full adoption credit even if they have no qualifying expenses at all (for instance, if state or government paid costs of adoption). Also keep in mind that any unused credit amount on this year's return can be carried forward to future years.
The estate tax exclusion for 2016 is $5,450,000 (double that for Married Filing Jointly couples), up $20,000 from the 2015 amount.
Estate tax rates for 2016 start at 18% and then progressively moves up to 40%.
Oh by the way, speaking of the estate tax, did you hear about how Prince's estate is getting hit with a $100 million tax bill? Apparently, despite the musician's widely-acknowledged business acumen including being one of the first artists to stand up to the record labels up to and including changing his name to an unpronounceable symbol, Prince apparently did not engage in any estate planning to minimize taxes upon his demise.
R.I.P Prince Rogers Nelson, you did it your way, that's for sure.
The annual exclusion for gifts remains at $14,000, no change from 2015.
The foreign earned income exclusion rises to $101,300 for 2016; taxpayers who are working abroad would file Form 2555 to claim this exclusion on their foreign earnings.
The Health Savings Account (HSA) limits for 2016 are $3,350 for an individual or $6,750 for family coverage (up $100 for family coverage). Taxpayers age 55 or older can tack on an extra $1,000 to those limits. HSAs provide a deduction for taxpayers upon contribution, with the added bonus of being able to withdraw funds (including the growth in the account) with no taxes on the distribution, provided withdrawn funds are used for qualified medical expenses.
And then there is this whole "sharing economy" thing. People are AirBnB'ing and VRBO'ing their houses as short-term rentals (does that income go on Schedule C or Schedule E?), they're trading goods and services online (wait a second, doesn't bartering create taxable income?), raising money online through websites like Kickstarter.com (is that "donation" to your short film project a non-taxable gift or taxable income?), using alternative currencies that are difficult to value (if I pay you in Bitcoin, how do you report that on your tax return?), attending Burning Man Festivals and writing it off as a business expense, and so forth and so on.
It's a brave new world and the IRS, taxpayers, and tax preparers all have our hands full to adjust to these new realities.
Presidential Tax Plans
One more thing.
Not sure if you heard the news but apparently Donald Trump is President now?
I've been so busy checking my Facebook news feed to keep up to speed on what people I haven't seen since high school are eating for dinner that I forgot to care who's about to become the Leader of the Free World.
But now that I'm thinking about "what's new with taxes," I guess we should mention the Presidential Tax Plans, because there could be some big changes upcoming.
Some highlights (or lowlights, depending on your perspective) of Trump's Tax Plan:
- Creating a zero percent tax rate for Single people up to $25,000, Head of Household up to $37,500, and Married Filing Jointly up to $50,000 (remember these are taxable income figures, not gross income). Mr. Trump held forth that this new zero percent rate would allow the taxpayer whose taxable income falls in these ranges to, instead of filing a conventional tax return, simply send the IRS a one page form containing the words "I win." This structure would remove 75 million households from the federal income tax rolls and tremendously simplify the tax filing process.
- Replacing current tax rates with a three-tax bracket structure: zero percent, 12 percent, 25 percent, and then a highest marginal rate of 33 percent
- "Steepening the curve" of the "income phase-outs" so that higher income taxpayers see more deductions disallowed
- Causing U.S. corporations to pay tax in the U.S. on income earned in foreign countries
- Providing U.S. corporations holding cash overseas a one-time low-tax "repatriation" tax rate as an incentive to bring that cash back to the U.S.
- Reducing the corporate tax rate to 15% and "unifying" the tax code so that pass-through entities such as S-corps and partnerships receive the same 15% business tax rate
- Eliminating the estate tax entirely
- Repealing the Affordable Care Act
Sounds like a busy schedule ...
Feeling Properly Updated?
Wow, that turned out to be a lot of information for a year in which there were not as many tax changes as previous years.
This article was so rich in information, I didn't even bother formatting it properly, I just let loose.
I do believe I just punched the Internet in the mouth with this blog post!!!
Take that, Internet, you've been giving us too much information for too long now--how about a taste of your own medicine for a change!
I tell you what, this whole tax code thing is kinda complicated, but you know we have to go all out for you.
So, with all that being said, still think it's a smart idea to do your own taxes?
If you'd rather have a professional take care of you, give us a call.
If you choose the DIY route, no hard feelings, and wishing you good luck!