What Changes Are Being Made to Tax Laws in 2016?
Photo courtesy of Flickr user 401kcalculator.org
With a new year inevitably comes a whole new crop of tax laws. 2016 is no exception, and there are some pretty noteworthy changes this year that could either save or cost you a bundle come tax time.
Here’s a quick look at some of the more significant news:
- Perhaps the most painful change will come with higher penalties for taxpayers who are not covered by an insurance plan. In 2016, those without a qualifying insurance plan through their employer or the federal exchange will be fined up to $2,085. In order to avoid a penalty, taxpayers need to be covered by the end of February. In addition, in 2016, families using the federal exchange can contribute another $100 for a new total of $6,750.
- Commuters who use mass transit and have utilized the $130 monthly pretax benefit will now have the ability to up that monthly amount to $255. Those who commute by car and have to pay for parking also will be able to up their monthly amount to $255.
- The latest government spending bill makes permanent several tax breaks that were set to expire at the end of 2015. Three of the now permanent breaks include education expenses. The first allows teachers to deduct up to $250 for the purchase of classroom supplies. The second allows a match against liability up to $2,500 annually when paying for education costs for up to four years of post-secondary education, including university, community college or vocational training. Finally, parents who have been saving for their kids’ college through a 529 plan, can now use those funds to purchase computers and computer related equipment, including software and internet fees.
- For the long-term unemployed, there could be some hope on the horizon. In 2016, Employers will be able to claim a $2,400 tax credit for hiring workers who have been unemployed for 27 or more weeks. This credit is aimed at helping older workers find jobs, as average time of unemployment for those over the age of 55 has risen to 41 weeks, according to the American Association of Retired People.
There’s a final piece of good news for taxpayers who typically wait until the very last minute to file. Because April 15 falls on a federal holiday (Emancipation Day) and it’s a Friday, you’ll have until Monday, April 18 to file. Just think, three more days to procrastinate!
Do you need help navigating the latest tax laws? Chicago tax attorney Patrick T. Sheehan can help. Contact us today.
Call us before the IRS calls you!