1. TAX Day is April 18, 2017: While we are accustomed to a filing tax deadline of April 15, this day falls on a Saturday so the deadline is moved to Monday April 17, but the District of Columbia observes this day as Emancipation Day, so this year’s tax deadline is pushed further back to Tuesday April 18, 2017.
2. The IRS has new power to take your passport away: The IRS can now take away your passport if you have federal tax debts of $50,000 or more, courtesy of a transportation bill that was passed in December 2016 but takes effect in January 2017.
3. Tax penalties related to Obamacare are increasing again: Obamacare penalties are going up dramatically for those who don’t have qualifying healthcare coverage under the Affordable Care Act. Those penalties started at $95 per adult (1 percent of income above the filing threshold) in 2014, but they rise again to $695 per adult (2.5 percent of income). Family maximum more than doubles from the $975 in 2015 to $2,085 in 2016.
4. Standard deductions are increasing for head-of-household filers: The standard deduction rises to $9,300 for heads of household (other status filings remain unchanged).
5. Personal exemptions are increasing: Personal exemption rises to $4,050 in 2016.
6. The Earned Income Credit is increasing: The maximum allowable Earned Income Credit will go up modestly in 2016: Families without children get $506; one-child get up to $3,373; two children get a maximum $5,572; and three or more qualifying children rise to $6,269.
7. Contribution limits on health savings accounts are increasing: Health savings accounts let people with high-deductible health plans set money aside on a pretax basis to cover the costs of their health care. For 2016, the contribution limit for individual policies will remain at $3,350 but the maximum contribution for family policies will rise to $6,750. A catch-up contribution of $1,000 for those 55 or older will continue to apply.
8. Tax brackets are increasing slightly: Most of tax brackets that govern different classes of taxpayers are adjusted for inflation. For 2016, these bracket amounts rise by roughly 0.4 percent.
9. The exemption from Alternative Minimum Tax (AMT) is higher: Single taxpayers will see their AMT exemptions go up to $53,900 while joint filers go up to $83,800.
10. The estate tax exemption is increasing: The lifetime exemption amount for the gift and estate tax rise to $5.45 million (up $20,000 from 2015). This limit applies to estates of those who passed away in 2016.
11. New foreign financial disclosures (offshore accounts): IRS takes a closer look at the foreign holdings of American citizens. U.S. residents have to file information about foreign holdings if they exceed $50,000 at year-end if you’re a single filer. Foreign holdings exceeding $75,000 at any time during the year must also be reported. For joint filers, the limits rise to $150,000 at any time, and $75,000 at year-end. For U.S. citizens living abroad, the reporting limits rise dramatically. Single filers need only report accounts exceeding $200,000 at year-end, or $300,000 at any point during the year. For joint filers, the limits are $400,000 at year-end, or $600,000 at any time during the year.
12. Other tax provisions could change if not renewed: Nearly every year, lawmakers wait until the last minute to renew popular tax breaks such as state sales tax deductions, teachers’ write-offs for classroom supplies, deductions for private mortgage insurance, and charitable distribution from IRAs. As we go to press at Asian Journal, these provisions have not yet been renewed, but lawmakers will probably renew some of them retroactive to the beginning of this year.
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Victor Santos Sy graduated Cum Laude from UE with a BBA and from Indiana State University with an MBA. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation in Pasadena, California.
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He has 50 years of experience in defending taxpayers audited by the IRS, FTB, EDD, BOE and other governmental agencies. He is publishing a book on his expertise – “HOW TO AVOID OR SURVIVE IRS AUDITS.” Our readers may inquire about the book or email tax questions at [email protected].