New For 2016 Tax Year
Affordable Care Act
All Americans will be affected in some manner by the Affordable Care Act from 2010 (Obamacare). 5 new tax forms were released by the IRS as a result of this bill for 2014. If you received a Form 1095 from any issuer or agency, we MUST have all copies to prepare your tax return. For 2016 you will have to have your 1095 in order to file your return.
Health Care Deductions
Last year’s tax bill reduced your deduction for medical costs, including health insurance for 2014. We will see very few deductions available for medical costs now unless you have substantial bills. The amount of your medical expenses in most cases must now be more than 10% of your income before we can deduct anything.
ALL deductions of any amount must have a receipt. Any individual contribution over $250 must also have an acknowledgement letter from the charity, and the letter must show the date and amount of any individual contribution.
If you paid attention to the news last year, you know that the IRS is looking closely for offshore accounts. If you have an account, retirement account, or business interest with a value over $10,000 in a foreign country, or a foreign business ownership (not through a mutual fund), there are substantial penalties for failure to disclose these items.
MN Military Credit
Service members may qualify for the credit if they meet all of the following requirements:
- They served in a combat zone or qualified hazardous duty
- They received combat pay, which is exempt from Federal and Minnesota Income Tax
- Their home of record was Minnesota during their months of service
Effective 1/01/2013 through 12/31/2016 the amount you may gift to one person in one year without any return filing requirements was increased to $14,000.
2016 Changes for child care providers:
* The Standard Meal Allowance rate for 2016 is $1.32 breakfast; $2.48 lunch/supper and $.74 snack.
* The standard mileage rate 2016 is $.54 per business mile.
- In late 2015 the IRS announced that providers may deduct in one year (rather than depreciating) items they purchased in 2015 that cost less than $2,500. This rule is permanent and applies to any purchase in 2016. Providers must include a written statement with their tax return. We will still need an itemized list of these purchases!