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Filing 2016 Taxes: Your Go-To Guide

Updated for Tax Year 2016


OVERVIEW

Whether it's the extended tax deadline, or expiring credits and deductions, we bring you everything you need to know to file your 2016 taxes with confidence.


Deadline for filing and paying your taxes

There is one key piece of information that every taxpayer — especially those who will be filing at the last minute — should keep in mind as April 17, 2017 draws near:

The deadline for filing 2016 returns is midnight on April 17, 2017.

The April 17 deadline applies to any return or payment normally due on April 17. It also applies to the deadline for requesting an individual return tax-filing extension and for making 2016 IRA contributions.

It would be simple if that were the only change in taxes this year. But, this year, as always, there are additional changes you need to be aware of as you prepare your income taxes. 


 The deadline for filing 2016 returns is midnight on April 17, 2017.


Cost-basis reporting no longer up to the taxpayer

Starting back with the 2011 tax forms, brokers or custodians of a person’s assets began tracking and reporting to the IRS the cost basis of those investments. In the past, it was up to the taxpayer.

The federal government established new tax reporting requirements with the Emergency Economic Stabilization Act of 2008, said financial adviser J. Mark Nickell of Brentwood, Tennessee-based J. Mark Nickell & Co. Its purpose was to get investors to accurately report on tax forms any gains and losses on securities. The changes will eventually simplify tax preparation for investors, Nickell said.

The effects of this legislation emerged in phases through 2014. For tax year 2012, custodians started reporting costs on covered and non-covered securities. For 2012, they also reported costs involved with mutual funds, exchange-traded funds and dividend reinvestment plans. In 2013, they started reporting on fixed-income options and other securities.

“In the past, the custodians of your assets reported how much a sale was for, but they wouldn’t have listed the cost basis,” said financial planner Chris Walker, also of Brentwood-based J. Mark Nickell & Co. “It was up to the taxpayer to dig through their records, sometimes going back years to find out how much they paid for it.”

Standard mileage rates down

The standard mileage rate for  business use of a car, van, pick-up or panel truck is 54 cents for 2016. If  the vehicle is operated for medical reasons or as part of a deductible move, the rate is 19 cents a mile for 2016. The rate for using a vehicle to provide services to charitable organizations remains at 14 cents a mile.

Homebuyer credit restriction and repayment

If you claimed the first-time homebuyer credit for a home bought in 2008 you must generally make the seventh of 15 annual repayment installments on your 2016 return.  Separately, a repayment requirement also applies where you purchased a home and claimed the credit on a prior year return and then sold it or stopped using it as a main home in 2016.

The focus in "1040 Instructions 2016" on line 67 of Form 1040 provides additional details.

Exemptions, savings accounts for medical, and capital gains/losses

The amount for personal exemptions has increased from $4,000 in 2015 to $4,050 in 2016.

The additional tax on distributions from health savings accounts (HSA) not used for qualified medical expenses has increased to 20 percent, and payments for medicine are now considered qualified medical expenses only if the medicine is a prescribed drug or insulin.

In most cases, taxpayers will now use the new Form 8949 to report capital gain and loss transactions. Schedule D, the form traditionally used to show these individual transactions, is now used as a summary sheet, reporting amounts for total sales price, basis and other adjustments for all individual transactions, and for figuring the tax.

Health insurance deductions

Eligible self-employed individuals may take a self-employed health insurance deduction in 2016. This deduction may be used not only for health insurance premiums that cover the filer, but also for spouses and other dependents as well as non-dependent children under the age of 27.

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The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.


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