4 Same-sex state tax filing
In a historic ruling for same sex couples, the US Supreme Court in June 2015 approved same sex marriage. No state can ban same sex marriage and states must recognize legal ceremonies performed elsewhere. On the tax front, that means gay and lesbian married couples now can file joint tax returns on the state level, just as they already were required to do with their federal taxes. This should simplify tax tasks for many same sex couples, since state tax departments tend to use the federal filing as the basis for state returns. Same sex couples also should check with their state tax departments about possible amending prior year returns that the partners had to file as single state taxpayers before the Supreme Court ruling.
5 Harder to hide international money
Good tax havens are getting harder to find. The Foreign Account Tax Compliance Act or FATCA, was enacted in 2010 after reports that foreign banks were encouraging US taxpayers to hide assets abroad. FATCA requires foreign financial firms to report account data for their US account data for their US account owners or face stiff penalties. Seventy nine countries, including the Holy See, have signed FATCA agreements with the IRS. In October, the IRS announced that it had taken the next step in foreign account reporting It now is automatically exchanging digital financial account information with tax authorities abroad. The bottom line is that it is no longer easy for international account holders to fly under the IRS radar. If you try and you are caught you could face substantial penalties and possible criminal prosecution. To avoid that, the IRS recommends you come clean through its offshore voluntary disclosure program. Here, you can pay what yu owe on your overseas money, and the IRS will back off on some of the potential penalties.
6 Proving education tax break eligibility
Do you depend on federal tax breaks to help pay for your higher education? Starting with the 2016 tax year, you will have to prove you are actually in class. A provision in trade legislation enacted in 2015 requires taxpayers to have in hand Form 1098-T to claim any educational tax benefits. This statement, which is sent by schools to students and copied to the IRS, verifies that you paid what the IRS calls "qualified educational expenses" in the preceding tax year. These include tuition, any fees that are required for enrollment and required course materials. If you do not get this official verification , you cannot claim the American Opportunity or Life Time learning tax credits or the tuition and fees deduction This reporting requirement was made after the Treasury inspector general for tax administration audits found that in 2011 and 2012, the IRS allowed billions of dollars in education tax credits for ineligible students. The change will not affect any education claims made on the 2015 returns filed in 2016
7 Tax preparer regulation effort continues
In 2015, the IRS revived and revised its efforts to regulate tax preparers. After the courts threw out the agency's plans to require certain tax preparers to take classes and pass tests, the IRS set up voluntary continuing education program for tax pros. The Annual Filing Season Program remains in place for 2016. The IRS is again facing legal challenges to its tax preparer regulatory efforts.
8 MyRAs and ABLE accounts open
Taxpayers in 2015 were introduced to 2 new tax-favored savings accounts that are designed for individuals who do not make much money. The starter retirement savings account know as myRA became available to all on Nov 4,2015. The myRA is aimed at lower income earners, allowing them to open a retirement savings account with minimal contributions and no fees. The accounts are patterned after Roth IRAs, which means there is no immediate tax benefit, the account grows tax free. The Achieving a Better Life Experience, or ABLE, account option became available Jan1,2015 This account resembles popular state run 529 college savings plans and is designed to help people with disabilities and their familes save and pay for disablility related expenses. Contributions to an ABLE account are not tax deductible, but withdrawals for qualified expenses are free from taxation.
9 Fantasy sports fallout
Fantasy sports are a big business, but many question the games legality. As the fantasy sports leagues morphed into daily games, several states - most notably Nevada and New York - declared them gambling enterprises and ordered the operations halted. From a fantasy sports player's tax perspective, the IRS now considers them money made on fantasy sports as taxable hobby income.
10 Persistent tax scams.
The IRS' expanded efforts to stem tax identity theft and related false refunds are jut part of the fraud fight. The agency reminds taxpayers that they have a critical role in staying alert for possible identity theft scams.
TOP 10 TAX ISSUES FOR 2015
Certified Public Accountants FAX 732-516-9778
328 Amboy Ave, Metuchen NJ 08840
GOAL IS SMOOTH
There were no major tax law changes
That is generally good news, meaning taxpayers do not have to worry about how new laws might affect them. However, Congress did manage to make some relatively small tax changes. There is also the continued implementation of prior tax measures, Uncle Sam's increasing efforts to stop tax identity theft and new tax deadlines, meaning that most taxpayers will encounter at least a few new tax matters in the new year.
Here are 10 tax topics to stay on top of in 2016
1 Targeting of identity thieves
In response to the inroads that identity thieves have made into the US tax system, the IRS convened a Security Summit in March 2015 to brainstorm ways to stop the crooks. Seven months later, the agency state tax officials and private sector tax industry announced a series of steps to stem tax ID theft and related refund fraud, including the sharing of more taxpayer filing data. Specifically, 20 new pieces of data will be used to validate tax returns in 2016. This information exchange should help validate the authenticity of taxpayers and the entries on tax returns in their names. IRS Commissioner John Koskinen says the added security measures should not be a sea change for filers. However, the new process is likely to slow the IRS processing of returns, and that could mean some delays in issuing refunds.
2 New tax deadlines
The way the days fall in April 2016 means that the usual mid-month tax -filing deadline is a bit later. In 2016, the Washington DC, holiday Emancipation Day is celebrated on April 15. Federal law mandates that any holiday in the nation's capital, also applies to offices there and that pushes the usual due date for annual 1040 filings to Monday April 18. Taxpayers in Maine and Massachusetts will get one more day until April 19 to file their federal returns because offices there will be closed on the 18th for Patriots Day, the holiday in those states that commemorates the first battles of the Revolutionary War
3 Obamacare tax penalties and credits
Have health insurance or be prepared to pay the price at tax filing time as a result of the Affordable Care Act. The price keeps going up, The individual responsibility payment penalty for not having minimal essential medical coverage is based on each month on the number of uninsured members of your family and your household income. An unisured household of 3 or more during the 2015 tax year could face a maximum penalty of $975. the maximum penalty for the 2016 tax year skyrockts to $2,085 There is a bit of good news on the Obamacare coverage front The Supreme Court ruled in June 2015 that the federal premium tax credit is available to eligible taxpayers, regardless of whether they bought their coverage on the federal exchange or through state marketplaces. This government subsidy is available to eligible insurance exchange policy buyers to help them pay for part of their required coverage.