After the giant ball drops in Times Square to signify a new year, the IRS is notorious for making some adjustments to the federal tax code. Some years have brought significant change, while other years remain very similar to previous years. For tax year 2015, there are some expected changes, but not much is dramatically different from tax year 2014. Let’s look at some of 2016 tax law changes you should know:
- New Filing Date
There is some good news in the new tax law changes. Because of the way the calendar is set up, individuals will have a few extra days to put their paperwork together and file it with the IRS. April 15, 2016, is an official District of Columbia holiday called Emancipation Day, as a result, taxpayers will have until April 18, 2016, to file their 2015 returns. Taxpayers in Maine and Massachusetts get an additional day to accommodate Patriots Day, with those state returns due April 19, 2016.
- Penalty for the Uninsured
Under the Affordable Care Act, also known as Obamacare, individuals who choose not to get health insurance through government exchanges, on their own or via their employers have to pay a penalty.
If you did not have health insurance coverage in 2015, you’ll have to pay the higher of these two amounts:
- 2 percent of your yearly income above the tax-filing threshold (generally about $10,150) up to a maximum cost of the national average premium to purchase a Bronze Plan from the federal healthcare exchange. Or …
- $695 per person ($347.50 per child under 18). The maximum penalty per family using this method is $2,085.
Those costs have more than tripled from calendar year 2014 when the penalty was $95 per person or 1 percent of household income.
- New Paperwork for Employers Related to the Affordable Care Act (ACA)
In addition to the increased tax penalties around the ACA this year for uncovered individuals, there are also new rules related to employer-required coverage. For calendar year 2015 filings, Form 1095-B and Form 1095-C, which were optional for calendar year 2014, must be filed by any employer that provides minimum essential coverage to an individual. Form 1095-C must be filed by all large employers covered under the law that have an average of at least 50 employees or at least full-time equivalent employees as measured by their average hours worked during calendar year 2015. Further, small employers that are members of a controlled group with a collective total of at least 50 full-time employees must also file form 1095-C.
- New Filing Deadlines for Businesses
The filing deadlines for partnerships and S corporations have been changed to the 15th day of the third month after the end of the tax year (meaning March 15 for those entities using a calendar tax year). C corporations, on the other hand, have to file by the fourth month after the end of the tax year (April 15 on a calendar-year schedule), which is a one-month deferral from previous filing requirements.
- Increase in identity theft
Under new policies announced by the IRS, taxpayers may receive a letter when the service stops suspicious tax returns that have indications of involving identity theft but contain legitimate taxpayer’s name and/or Social Security number. The IRS has agreed to reverse its policy and provide identity theft victims with copies of the fraudulent tax return that has been filed under their name by scammers, so they can take the proper steps to secure their personal information.