1. 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.

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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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

16. Indexing – Standard Mileage
2016 Rates:
54¢ per mile – business miles
19¢ per mile – medical miles
14¢ per mile – charitable miles
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17. 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

18. 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

19. 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

20. 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

21. Other Indexing or Changes
ACA
Federal poverty lines
Shared responsibility payment amounts
Applicable percentages (taxpayer contribution, affordability)
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22. 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

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