Federal Tax Law Changes – Tax Year 2016 Pub 4012 – Pages New 1 – 5 Pub 4491 – Pages iii – viii Slide #5: Added a note about the new waiver program for 60 day IRA rollover and slides in Income Retirement lesson.

Federal Tax Law Changes 2016 New provisions Extended provisions Indexing Due Dates NTTC Training – TY2016

New Provisions – Scope Interest included in debt discharged on Non-business Credit Card Debt Because only non-business credit card debt forgiveness is in scope, any interest (box 3) would also be non- business therefore 100% of debt forgiven is taxable NTTC Training – TY2016

New Provisions – Scope 1099-R with Box 7, Code U ESOP dividend distribution Handled exactly like a 1099-R Box 7, Code 7 No additional training required at federal level TBD: Will TaxSlayer handle properly at State level? NTTC Training – TY2016

New Provisions – IRA Additional waiver reasons if recipient of retirement plan distribution inadvertently misses 60-day time limit for rolling distribution into another retirement plan or IRA See slides # 24 & 25 of lesson # 18, Income Retirement, for more details about the waiver process. NTTC Training – TY2016

New Provisions – EIC Taxpayers must have valid SSN by due date of return (including extension) to claim EIC Taxpayers can’t file amended returns to claim credit for a year that taxpayer didn’t originally have a valid social security number NTTC Training – TY2016

New Provisions – American Opportunity Credit Taxpayers must have valid SSN or ITIN and student must have valid SSN, ITIN or ATIN by due date of return (including extension) to claim American Opportunity Credit Taxpayers can’t make retroactive claims for the credit for a period that the taxpayer and student didn’t have a required identification number NTTC Training – TY2016

New Provisions – Child Tax Credit Taxpayers must have valid SSN or ITIN and child must have valid SSN, ITIN or ATIN by due date of return (including extension) to claim Child Tax Credit Taxpayers can’t make retroactive claims for the credit for a period that the taxpayer and student didn’t have a required identification number NTTC Training – TY2016

New Provisions – Other American opportunity tax credit made permanent, replacing the Hope credit Reduced earned income threshold for additional child tax credit made permanent at $3,000 Earned income tax credit made permanent for three or more qualifying children Refundable Credits Refund date – refund on hold until February 15 if taxpayer claimed EITC or additional child tax credit (ACTC) The IRS wants taxpayers to be aware it will take several days for refunds containing EITC or ACTC to be released and processed through financial institutions. Factoring in weekends and the President’s Day holiday, the IRS cautions that many affected taxpayers may not have actual access to their refunds until the week of Feb. 27. NTTC Training – TY2016

New Provisions – Other Older ITINs or ITINs unused for past three years must be renewed Qualified higher education expenses for 529 plans expanded to include computer equipment and technology NTTC Training – TY2016

Extended Provisions – Permanently Extended Qualified Charitable Distribution – QCD (tax- free distribution from IRAs to public charities for individuals age 70½ or older) Adjustment for educator classroom expenses up to $250 Now includes professional development courses Indexed starting in 2016 Deduction for state and local general sales taxes A QCD counts towards the taxpayer’s required minimum distribution. NTTC Training – TY2016

Extended Provisions – Extended through 2016 COD exclusion for principal residence Premiums for mortgage insurance deductible as interest for qualified residence Nonbusiness energy property credit Adjustment for qualified tuition and fees NTTC Training – TY2016

Indexing – Standard Deduction Std Ded + if blind + if ≥65 Single $ 6,300 $ 1,550 MFJ 12,600 1,250 ea MFS 6,300 1,250* HH 9,300 1,550 QW 1,250 *also applies to dependent spouse if claimed NTTC Training – TY2016

Indexing – Itemized Deductions Subject to phase-out if AGI over $259,400 Single $311,300 MFJ or QW $155,650 MFS $285,350 HH NTTC Training – TY2016

Indexing – Exemption Deduction Exemptions increase to $4,050 Subject to phase-out if AGI over $259,400 Single $311,300 MFJ or QW $155,650 MFS $285,350 HH NTTC Training – TY2016

Indexing – Standard Mileage 2016 Rates: 54¢ per mile – business miles 19¢ per mile – medical miles 14¢ per mile – charitable miles NTTC Training – TY2016

Indexing – EIC Maximum Credits and Income $6,269 – three or more qualifying children $5,572 – two qualifying children $3,373 – one qualifying child $506 – no qualifying child $47,955 ($53,505 MFJ) 3 qualifying children $44,648 ($50,198 MFJ) 2 qualifying children $39,296 ($44,846 MFJ) 1 qualifying child $14,880 ($20,430 MFJ) no qualifying child Max Credit Max Income NTTC Training – TY2016

Indexing – Deductible Long-Term Care Premium Limits Qualified long-term care premiums includible as medical expense on Sch A $390 – Age 40 or under $730 – Age 41 to 50 $1,460 – Age 51 to 60 $3,900 – Age 61 to 70 $4,870 – Age 71 and over NTTC Training – TY2016

Other Indexing HSA Limits Retirement savings credit income limits $3,350 self-only coverage $6,750 family coverage Both + $1,000 if age 55 or older Retirement savings credit income limits Max $30,750 for S, MFS, QW; $61,500 for MFJ; $46,125 for HH Max investment income for EIC $3,400 NTTC Training – TY2016

Other Indexing IRA contributions Max $5,500 ($6,500 if age 50 or older) Modified AGI limits when covered by employer plan Lifetime learning credit income limits Excludible savings bond interest – out of scope Foreign earned income/housing exclusion NTTC Training – TY2016

Other Indexing or Changes ACA Federal poverty lines Shared responsibility payment amounts Applicable percentages (taxpayer contribution, affordability) NTTC Training – TY2016

Due Dates 2016 federal tax returns are due Tuesday, April 18, 2017 2017 estimated payments are due April 18, 2017 June 15, 2017 September 15, 2017 January 15, 2018 In 2017, April 15 falls on a Saturday but the District of Columbia celebrates Emancipation Day on April 16 and when that date falls on a Saturday, Friday (the 15th next year) becomes the official date. Since the term “federal holiday” includes any legal holiday observed in the District of Columbia, all taxpayers will now automatically get their due date extended to Monday April 18. In addition, Patriots Day is celebrated in Massachusetts and Maine on the 3rd Monday in April which is April 17. Therefore, taxpayers in these two states get to file and pay on Tuesday April 18. NTTC Training – TY2016

Tax Law Changes 2016 Comments… Questions? NTTC Training – TY2016