Dane County Credit Union has partnered with Focused Tax Solutions to offer our members expert tax preparation at a special promotional rate. More than 50 tax provisions, including the tax rate schedules, and other tax changes are adjusted for inflation in 2016. Let’s take a look at the 2016 tax updates most likely to affect taxpayers like you.
But first a BONUS tip:
Be sure when you give your tax preparer your DCCU account number for direct deposit of your refund, you give the ENTIRE account number on the bottom middle of your checks. This number may be longer than the one you give us at DCCU but if you don’t give the full number, your refund will be delayed or could be placed into the wrong account. Your best bet is to give your preparer a voided check so they can get the correct number. Please contact us if you have questions or need help.
Now back to the 2016 tax updates…
- The tax rate of 39.6 percent affects singles whose income exceeds $415,050 ($466,950 for married taxpayers filing a joint return), up from $413,200 and $464,850, respectively. The other marginal rates–10, 15, 25, 28, 33 and 35 percent–and related income tax thresholds–are found at IRS.gov.
- The standard deduction remains at $6,300 for singles and married persons filing separate returns and $12,600 for married couples filing jointly. The standard deduction for heads of household rises to $9,300, up from $9,250.
- The limitation for itemized deductions to be claimed on tax year 2016 returns of individuals begins with incomes of $259,400 or more ($311,300 for married couples filing jointly).
- The personal exemption for tax year 2016 rises to $4,050, up from the 2015 exemption of $4,000. However, the exemption is subject to a phase-out that begins with adjusted gross incomes of $259,400 ($311,300 for married couples filing jointly). It phases out completely at $381,900 ($433,800 for married couples filing jointly.)
- The Alternative Minimum Tax exemption amount for tax year 2016 is $53,900 and begins to phase out at $119,700 ($83,800, for married couples filing jointly for whom the exemption begins to phase out at $159,700). The 2015 exemption amount was $53,600 ($83,400 for married couples filing jointly). For tax year 2016, the 28 percent tax rate applies to taxpayers with taxable incomes above $186,300 ($93,150 for married individuals filing separately).
- For 2016, the maximum Earned Income Credit amount is $6,269 for taxpayers filing jointly who have 3 or more qualifying children, up from a total of $6,242 for tax year 2015. The revenue procedure has a table providing maximum credit amounts for other categories, income thresholds and phase-outs.
- Estates of decedents who die during 2016 have a basic exclusion amount of $5,450,000, up from a total of $5,430,000 for estates of decedents who died in 2015.
- For 2016, the exclusion from tax on a gift to a spouse who is not a U.S. citizen is $148,000, up from $147,000 for 2015.
- For 2016, the foreign earned income exclusion rises to $101,300, up from $100,800 in 2015.
- The annual exclusion for gifts remains at $14,000 for 2016.
- The annual dollar limit on employee contributions to employer-sponsored healthcare flexible spending arrangements (FSA) remains at $2,550.
- Under the small business health care tax credit, the maximum credit is phased out based on the employer’s number of full-time equivalent employees in excess of 10 and the employer’s average annual wages in excess of $25,900 for tax year 2016, up from $25,800 for 2015.
Need help with tax planning in 2016? Help is just a phone call or email away – 855 829-8991 or 262 827-1500 for a free initial consultation or email [email protected]
This article is courtesy of our partners at Focused Tax Solutions.
*Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. If desired, Focused Tax Solutions would be pleased to perform the requisite research and provide you with a detailed written analysis. Such an engagement may be the subject of a separate engagement letter that would define the scope and limits of the desired consultation services.