The U.S. tax code is continually evolving. Which means that every new 12 months brings a slew of modifications that taxpayers want to recollect when submitting their taxes.
What modifications to the tax code passed off final 12 months, and the way will they influence your federal taxes this 12 months? Tax and monetary consultants say that the 2016 modifications have been comparatively minor. However that does not imply that they will not have an effect on the quantity of tax {dollars} you ship to Uncle Sam this 12 months.
Here’s a have a look at 5 of a very powerful tax modifications from final 12 months, and what they will imply to you as you file your taxes this April.
1. Normal deductions
The usual deduction for heads of households rose to $9,300 for the 2016 tax 12 months, which was $50 greater than in 2015. This quantity was raised once more for the 2017 tax 12 months (which you may pay in ’18), bringing it as much as $9,350.
Different normal deductions remained the identical for the 2016 tax 12 months: $6,300 for singles and married taxpayers submitting separate returns and $12,600 for married {couples} submitting collectively. For the 2017 tax 12 months, each these numbers will improve once more to $6,350 and $12,700, respectively.
2. Additional scrutiny for Earned Revenue Tax Credit score, Extra Youngster Tax Credit score
Dave Du Val, chief advocacy officer at TaxAudit.com, stated that the returns of these taxpayers who declare the Earned Revenue Tax Credit score or the Extra Youngster Tax Credit score would possibly obtain extra scrutiny in 2017. In keeping with new federal regulation, tax preparers are required to finish a number of steps — or due diligence — when working with the returns of taxpayers who declare each of those credit.
The Earned Revenue Tax Credit score is a refundable tax credit score for working taxpayers with low to average incomes, and is designed to supply these filers some monetary aid at tax time. The Extra Youngster Tax Credit score can be designed for filers incomes low incomes. These filers would possibly obtain a tax credit score beneath this provision if their authentic little one tax credit score is greater than the whole quantity of revenue taxes they owe.
Congress would not need filers to abuse these credit, Du Val stated.
"What this implies is that taxpayers who declare these credit inappropriately can lose the power to assert them for years," Du Val stated. "Additionally, those that use an expert tax preparer who follows the letter of the regulation would possibly discover themselves required to reply extra questions and supply extra documentation than they’re typically used to."
3. You would possibly want a driver’s license to file electronically
Michael Eckstein, a tax accountant and proprietor of Michael Eckstein Tax Companies in Huntington, New York, stated that a number of states at the moment are requesting and even requiring that taxpayers present their driver’s license info in the event that they wish to file their state tax returns electronically.
"Tax return fraud has been a rising downside," Eckstein stated.
States are requesting the driving force’s license info as one approach to lower down on tax-related id theft.
Most states are solely requesting that taxpayers who electronically file present both their driver’s license quantity or state ID numbers. You will nonetheless have the ability to submit your state tax returns electronically with out offering this info, however doing so would possibly set off a guide evaluate by your state to confirm your id. This implies it make take longer to obtain a refund when you do not present your driver’s license or state ID quantity.
You will not be requested to supply this info, although, when submitting your federal tax returns electronically.
4. Mileage deduction price dips
Do you utilize your automotive for enterprise? Then you may deduct these miles in your taxes. Sadly, that deduction has decreased. For the 2016 tax 12 months, you may deduct 54 cents per mile that you simply drive your automobile for enterprise. That’s down from 57.5 cents a mile in 2015. For the 2017 tax 12 months, the deduction will lower once more to 53.5 cents per mile.
Watch out when deducting miles, although. You may’t deduct the prices of your common commute to and from work.
5. Three additional days to file
And perhaps a very powerful change for the procrastinators on the market? This 12 months, you might have a couple of additional days to file your taxes.
Positive, April 15 is the standard day by which we’re all purported to file our taxes. However this 12 months, submitting day has been pushed again to April 18. Credit score this little bit of aid to the mixture of a weekend and a Washington, D.C. vacation.
The standard April 15 deadline falls on a Saturday this 12 months. Usually, taxpayers must file their revenue taxes on the next Monday, which might be April 17. However the D.C. vacation Emancipation Day is held on Monday, April 17. That offers taxpayers throughout the nation yet one more additional day to file, April 18.
Federal regulation states that Washington, D.C. holidays influence tax deadlines the identical means federal holidays do.
