1. INDIVIDUAL AND BUSINESS TAX ISSUES Your Return in 2015 and 2016
Good [morning/afternoon]. My name is [name] and I’m with [name of firm]. I want to thank you for the opportunity to speak with you today/this morning/this afternoon.
The subject for today is taxes. We are in unusual times, with so many of the tax laws scheduled to expire or significantly change. It is expected that Congress will take action to extend many of these provisions, but no one is sure yet when and how significant the changes will be. Today, we will explore some of the tax planning strategies you may want to consider in these times of uncertainty.
INDIVIDUAL AND BUSINESS TAX ISSUES Your Return in 2015 and 2016
Updated January 1, 2016

2. INDIVIDUAL AND BUSINESS TAX ISSUES
Current Business Taxes and Extensions
There were numerous extensions to the tax code and some provisions were made permanent.
Not all of these Extensions or Taxes are covered herein, as some relate to very small numbers of businesses.
INDIVIDUAL AND BUSINESS TAX ISSUES
So we’ve looked at some of the new provisions that might impact your returns this year.  Now let’s look a few other things issues you may want have on your radar as you plan moving forward.

3. Tax Benefits Extended
The PROTECTING AMERICANS FROM TAX HIKES ACT OF 2015:
Enhanced child tax credit was permanently set at $3,000.
Enhanced American opportunity tax credit made permanent. The American Opportunity Tax Credit modifies the existing Hope Credit, and makes the Hope Credit available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. Many of those eligible will qualify for the maximum annual credit of $2,500 per student.
Enhanced earned income tax credit made permanent.
Extension and modification of deduction for certain expenses of elementary and secondary school teachers.
Extension of parity for exclusion from income for employer-provided mass transit and parking benefits.
Extension of deduction of State and local general sales taxes.
The ATRA extended several popular deductions through the end of For example, primary and secondary school teachers can deduct up to $250 of qualified, non-reimbursed job-related expenses they pay each year. Mortgage insurance premiums are also deductible through 2013.

4. Tax Benefits Extended
The PROTECTING AMERICANS FROM TAX HIKES ACT OF 2015 (Continued):
Extension and modification of special rule for contributions of capital gain real property made for conservation purposes.
Extension of tax-free distributions from individual retirement plans for charitable purposes.
Extension and modification of charitable deduction for contributions of food inventory.
Extension of modification of tax treatment of certain payments to controlling
exempt organizations.
Extension of basis adjustment to stock of S corporations making charitable contributions of property.
The ATRA extended several popular deductions through the end of For example, primary and secondary school teachers can deduct up to $250 of qualified, non-reimbursed job-related expenses they pay each year. Mortgage insurance premiums are also deductible through 2013.

5. Tax Benefits Extended
The PROTECTING AMERICANS FROM TAX HIKES ACT OF 2015:
Deduction for state and local sales taxes was made permanent.
Exemption for cancellation of debt on a principal residence
Tax credits for making qualified energy-saving improvements to a personal residence
Extension of the Mortgage Insurance deduction
Extension of above the line deduction of qualified tuition and related expenses.
Extension of tax free distribution from retirement plans for charitable purposes.
The ATRA extended several popular deductions through the end of For example, primary and secondary school teachers can deduct up to $250 of qualified, non-reimbursed job-related expenses they pay each year. Mortgage insurance premiums are also deductible through 2013.

6. 2015/2016 Tax Rates 2015/2016 Taxable Income Brackets and Rates Rate
Year
Single Filers
Married Joint Filers
Head of Household Filers
10%
2015
$0 to $9,225
$0 to $18,450
$0 to $13,150
2016
$0 to $9,275
$0 to $18,550
$0 to $13,25050
15%
$9,225 to $37,450
$18,450 to $74,900
$13,151 to $50,200
$9,276 to $37,650
$18,551 to $75,300
$13,250 to $50,400
25%
$37,451 to $90,750
$74,901 to $151,200
$50,201 to $129,600
$37,650 to $91,150
$75,301 to $151,900
$50,401 to $130,150
28%
$90,751 to $189,300
$151,200 to $230,450
$130,151 to $209,850
$91,150 to $190,150
$151,901 to $231,450
$127,551 to $210,800
33%
$189,301 to $411,500
$230,451 to $411,500
$209,851 to $411,500
$190,151 to $413,350
$231,451 to $413,350
$210,801 to $413,350
35%
$411,501 to $413,200
$411,501 to $464,850
$411,501 to $439,000
$413,351 to $415,050
$413,351 to $466,9500
$413,351 to $441,000
39.6%
$413,200+
$464,851+
$439,001+
$415,051+
$466,951+
$441,001+

7. Changes in Personal Amounts
Item
2014
2015
2016
Standard Deduction
Married Filing Jointly
12,400
12,600
Single (and married filing separately)
6,200
6,300
Head of Household
9,100
9,250
9,300
Personal Exemption (Subject to Phase out limits)
3,950
4,000
4,050
Social Security Wage Base
117,000
118,500
Employee Portion of Social Security
6.2%
Medicare Wage Base at 1.45%
No Limit
Additional Medicare Wage Tax for Wages that exceed $200,000 in Calendar Year
0.09%
Domestic Employees – Withhold/Pay FICA (Babysitters, house cleaners, etc.
1,900
2,000
Gift Tax Annual Exclusion
14,000

8. Personal Exemptions Phase-outs 2015/16
Total amount of personal exemptions for taxpayers and dependents is gradually reduced if the taxpayer’s adjusted gross income is greater than:
$309,900 for 2015 and $311,300 for 2016 for married couples
$258,250 for 2015 and $259,400 for 2016 for single taxpayers
$284,900 for 2015 and $285,350 for 2016 head of household
The personal exemption phaseouts (or PEP) are back in the new law, but the income thresholds are higher than in the past.

9. Itemized Deductions
There is a limitation on itemized deductions for high-income taxpayers
Deductions reduced by 3% of amount by which taxpayer’s AGI exceeds threshold
Reduction is limited to 80% of otherwise allowable deduction (i.e., taxpayers will receive at least 20% of itemized deductions)
Exception for certain itemized deductions:
Medical expenses
Investment interest expense
Casualty, Gambling or theft losses
Although the “Pease” limitation on itemized deductions for higher-income taxpayers was reinstated, the threshold levels were raised.

10. 2015 High Impact Tax Extension
Forgiveness of Debt
Homeowner's in recent years, who had mortgage debt forgiven by a lender have been exempted from paying tax on the forgiven debt. This provision was passed to stabilization in the housing market a few years back, and was extended through to 2015 and 2016.
Note: There are exceptions to this relief. Consult a tax professional for details.

11. Dividends and Capital Gains
Ordinary income
Single
Qualified dividends and long term capital gains
over to
10% $0
$9,225 0%
15%
$37,450
25%
$90,750
28%
$189,300
33%
$411,500
35%
$413,200
39.60%
20%
Married filing jointly /Qualifying widow or widower
Ordinary income
over to
Qualified dividends and long term capital gains
10% $0
$18,450 0%
15%
$74,900
25%
$151,200
28%
$230,450
33%
$411,500
35%
$464,850
 39.60%
20%
Business owners should be aware that there may be tax implications for taxpayers who plan to sell stocks or other investment assets, due to the higher dividend income and long-term capital gains tax rate. The tax impact can be minimized through proper planning before making any sales of stocks or other investment assets.

12. 3.8% Surtax on Net Investment Income
Applies to individuals with modified AGI above certain thresholds:
$250,000 for married couples filing jointly
$200,000 for single taxpayers
Includes capital gains, interest and dividend income from investment assets, rental and royalty income
This tax applies to common investment assets such as stocks and bonds, certificates of deposit and mutual funds. For income earned this year, the highest individual income tax rate will be 39.6%. For taxpayers at this level, the dividend income and long-term capital gains tax rate also jumps from 15% to 20% (23.8% if the Medicare surtax on net investment income applies). Dividends and long-term capital gains for other taxpayers remain the same, at rates ranging from 0 to 15%.

13. Mortgage Insurance Premiums
Homeowners who paid mortgage insurance premiums have been able to deduct them along with the interest they pay on their home loans. Extended through December 31, 2016.

14. Retirement Planning 2015/2016 Contribution limits for 401(k)s:
2015 and 2016 of $18,000 (plus $6,000 Catch-up)
2015 and 2016 IRA $5,500 (plus $1,000 Catch-up)
401(k) money can be rolled over into a Simple IRA plan. This should make pension planning simpler.
Other: Health Savings Accounts:
2016: Single-$3,350 contribution limit (plus $1,000
Catch-up) (55+)
2016: Family-$6,750 contribution limit (plus $1,000
Catch-up (55+)
Assets and earnings in Roth retirement accounts grow tax-free and qualified distributions are not subject to tax. Income taxes are due on the assets rolled over into a Roth from a non-Roth retirement account. Remember that the decision to convert traditional retirement accounts to Roth accounts is complex. Factors to consider include age, years to retirement and current and projected tax rates.

15. Deduction for certain expenses of elementary and secondary school teachers
Deduction made permanent: the above-the-line deduction for the eligible expenses of elementary and secondary school teachers. The deduction was capped at $250, but starting in 2016 will be indexed for inflation.

16. Changes in the Transportation Amounts
Item
2014
2015
2016
Business Mileage, Per Mile (reimburse an employee for business use of a personal vehicle)
56 Cents
57.5 Cents
54 Cents
Charitable Mileage, Per Mile
14 Cents
Medical and Moving, Per Mile
23.5 Cents
23 Cents
19 Cents

17. Higher Education Incentives
Enhanced American opportunity tax credit made permanent. The American Opportunity Tax Credit modifies the existing Hope Credit, and makes the Hope Credit available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. Many of those eligible will qualify for the maximum annual credit of $2,500 per student.
Lifetime learning credit continued
for 2014 and 2015 with phase outs
Student loan interest up t $2,500
The ATRA extended several education-related incentives for taxpayers who are in college or have children in college. For example, the American Opportunity Tax Credit was extended through 2017 and allows eligible taxpayers to claim a tax credit for qualified post-secondary education expenses. The Lifetime Learning Credit remains available as does the above-the-line deduction for qualified tuition and related post-secondary education expenses.

18. Charitable Contributions
Extension and modification of special rule for contributions of capital gain real property made for conservation purposes.
Extension of $100,000 tax-free distributions from individual retirement plans of Taxpayers 701/2 and older for charitable purposes.
Extension and modification of charitable deduction for contributions of food inventory.
Extension of modification of tax treatment of certain payments to controlling exempt organizations.
Extension of basis adjustment to stock of S corporations making charitable contributions of property.
Charitable contributions may provide generous tax benefits, but taxpayers will need significant documentation and deductions may be subject to limits based on the type of property donated, the type of charity and your adjusted gross income.

19. Changes in Estate & Gift Tax
Item
2013
2014
2015
2016
Annual Gift Exclusion ((Amount you can give each person)
14.000
14,000
Federal Estate Tax Exemption (Indexed for Inflation)
$5.25 Million
$5.34 Million
$5.43 Million
$5.45 Million
Maximum Estate Tax Rate
40%

20. Section 179 Expense Made Permanent
Sec. 179 increased $500,000 expensing limit and $2 million phase out threshold and an expanded definition of Sec. 179 property to include qualified real property.
The bill also indexes the $500,000 and $2 million amounts for inflation beginning in 2016.
It also treats air conditioning and heating units placed in service after 2015 as eligible for expensing.
The bill eliminates the $250,000 cap with respect to qualified real property beginning in 2016.

21. Bonus Depreciation Deduction (Five Year Extension)
A depreciation deduction equal to 50% of the adjusted basis of qualifying property in the first year it is placed in service (also known as bonus depreciation).
The percentage phases down to 40% for property placed in service in 2018 and to 30% for property placed in service in 2019.
The bill also modifies the AMT rules to increase the amount of unused AMT credits that can be claimed in lieu of bonus depreciation.

22. Health Care Coverage 2015 fee for not having coverage The fee in 2016
In 2016 the penalty is 2.5% of income or $695 per person. After that it's adjusted for inflation
If you don’t have coverage in 2015, you’ll pay the higher of these two amounts:
2% of your yearly household income. (Only the amount of income above the tax filing threshold, about $10,000 for an individual, is used to calculate the penalty.) The maximum penalty is the national average premium for a bronze plan.
$325 per person for the year ($ per child under 18). The maximum penalty per family using this method is $975.
The penalty increases every year. In 2016 it’s 2.5% of income or $695 per person. After that it's adjusted for inflation