Note: The following information is condensed and serves only to highlight some of the new laws that are effective for 2016 tax returns. There are many other changes. Provisions within the laws affect some taxpayers differently than others. Your individual circumstances will determine how you are impacted by the laws. Count on SKILL-Tax for your tax preparation needs, www.skill-tax.com; 453-1755.
Maximum EITC amounts for this year’s income tax return are listed below.
$506 -if you claim no children and income under $14,880 ($20,430 if MJF). You must be between the ages of 25 and 65 in this case.
$3,373 -if you claim one child and income under $39,296 ($44,846 if MFJ).
$5,572 -if you claim two children and income under $44,648 ($50,198 if MFJ).
$6,269 -If you claim three or more children and income under $47,955 ($53,505 if MFJ).
Standard Deductions -$6,300 for Single and MFS. $9,300 for HOH. $12,600 for MFJ and Qualifying-Widow(er).
Personal Exemption -is $4,050 -subject to phase-out rules for high-income taxpayers.
Child Tax Credit -continues to be $1,000 for each qualifying child (under age 17).
Additional Child Tax Credit –is refundable, for to the extent of 15% of earned income in excess of $3,000.
Business Mileage –for 2016- is 54 cents per mile for business. The rates for deductible medical and moving expenses is 19 cents. The charitable volunteer rate is 14 cents.
Charitable Donations – For cash donations of $250 or more, you must have a written acknowledgement from the organization that indicates whether you received goods or services in return for your donation. A cancelled check is not sufficient evidence for a cash donation of $250 or more. If you donated used clothes; furniture; or appliances; deduct their fair market value, usually much less than your original cost. Prices paid in thrift shops are indications of fair market value.
IRA Contributions -the contribution limit is $5,500, plus an additional $1,000 if age 50. Deductions are subject to phase out limits.
Elective Deferrals – limits remain $18,000 for 401(k), 403(b), 457, and SEP plans -plus an additional $6,000 if age 50. While SIMPLE plan limits are $12,500, the additional contribution if age 50 is $3,000.