News

Best…(Tax)Year…Ever…

By: Kyle Day

The season to Netflix Turbo Tax and chill has arrived, and efforts to eFile before someone else does (fraudulently) on your behalf are underway.  In case you hadn’t considered it before, the IRS recently released a Fact Sheet outlining several reasons why the 2015 tax return season may just be the best ever:

It’s longer.  Taxpayers outside of Maine and Massachusetts have three additional days to file their tax returns.  This filing day anomaly is because Washington D.C.’s Emancipation Day falls on April 15.  As the IRS Fact Sheet tells us, by law, District of Columbia holidays impact tax deadlines the same way federal holidays do.  For Maine and Massachusetts taxpayers, tax season is even longer.  Thanks to Patriots’ Day, observed on April 18, those taxpayers will have until April 19 (!!!) to file taxes.  In all cases, the extended filing deadline for 2015 returns is October 17, 2016.

It’s more benefit-y.  In 2015, various deductions, exemptions and rates have been increased, retroactively extended and extended, including the following:

  • The standard deduction for 2015 increased to $12,600 ($12,400 in 2014) for joint returns and surviving spouses, $6,300 ($6,200) for unmarried individuals and married individuals filing separately, and $9,250 ($9,100) for heads of households.
  • The personal exemption for 2015 is $4,000, up from $3,950 in 2014.
  • Despite U.S. Department of Energy predictions for gas prices and the lowest full-year average since 2009, the standard mileage rates for cars, vans, pickups, and trucks increased to 0.575 in 2015, up from 0.56 in 2014.
  • In December 2015, Congress passed the Protecting Americans from Tax Hikes (PATH) Act which retroactively extended, extended and, in some cases, made permanent a number of tax benefits that otherwise had expired as of the end of 2014, including: section 164(b)(5)(A) of the Code which makes permanent an election to claim as an itemized deduction local general sales and use taxes instead of state and local income taxes; section 62(a)(2)(D) which provides and expands an above-the-line deduction (dollar-for-dollar reduction to adjusted gross income) for up to $250 of teachers’ classroom supplies expenses; section 25A(i) American Opportunity Tax Credit which provides a $2,500 credit per student for the first four years of postsecondary education; section 108(a)(1)(E) providing an exclusion for up to $2 million ($1 million for married individuals filing separately) of income from the cancellation of qualified principal residence indebtedness. Finally, fans of Netflix’s Making A Murderer and Bryan Stevenson’s excellent book Just Mercy should take note that the PATH Act adds section 139F to the Code to exclude the gross income of an individual who is convicted of a criminal offense under federal or state law and wrongfully incarcerated received as a result of any civil damages, restitution, or other monetary award relating the individual’s incarceration.

It’s healthier.  As a reminder, the Patient Protection and Affordable Care Act amended the Public Health Service Act to implement certain market reforms for group health plans.  As part of the Act’s implementation, new forms, 1095-B and 1095-C, providing information about health coverage will be issued for 2015.  While these forms are not required to file your tax return, information contained in the forms may be helpful in preparing your return.  While on the topic of the ACA, the individual shared responsibility payment has increased from 2014 and will apply to taxpayers who did not have qualifying coverage or an exemption for each month during 2015.

It’s more equitable.  In 2015, the Treasury Department and IRS published proposed regulations addressing the holdings of Obergefell v. Hodges, 576 U.S. _____, 135 S. Ct. 2584 (2015), Windsor v. United States, 570 U.S. _____, 133 S. Ct. 2675 (2013) and Rev. Rul. 2013-17, 2013-38 I.R.B. 201, defining and describing the marital status of taxpayers.  The proposed regulations would amend current regulations to provide that for federal tax purposes the terms “spouse,” “husband,” and “wife” mean an individual lawfully married to another individual, and the term “husband and wife” means two individuals lawfully married to each other.  In each case, the definitions would apply regardless of sex.  The effective date of the proposed regulations would apply to taxable years ending on or after the date of publication of final regulations.  However, as a practical matter, as a result of Obergefell, Windsor, and Rev. Rul. 2013-17, the rules are already in effect.

Kyle Day Attorney At Law

Kyle is a licensed certified public accountant in Iowa, Illinois, and Minnesota and maintains a general tax and transactional practice at Lane & Waterman.