2015 Illinois Tax Refunds

The Illinois Department of Revenue has announced that as a result of new security measures and to help combat tax identity theft, they will not be sending out refunds on 2015 Illinois tax returns filed in the early part of this upcoming tax season until after March 1, 2016.

Here is the anticipated timeframe for when refunds on electronically filed Illinois returns will be issued: 

• Filed prior to March 1 – Within two to three weeks from March 1, 2016. 

• Filed after March 1 – Within two to three weeks from the date the return is accepted.

IRS Announces Start Dates for 2016 Filing Season

The IRS has announced the start dates of the 2016 filing season.

Individual returns (1040): Tuesday, January 19, 2016
Business returns (1120, 1120-S, and 1065): Saturday, January 9, 2016

See the 2016 Tax Season Opens January 19 for Nation's Taxpayers news release (December 21, 2015) on the IRS website for more information on the start date for individual (1040) returns.

Details of the 2015 Tax Extender Legislation Just Passed by Congress

Today, December 18, 2015, Congress passed the Protecting Americans from Tax Hikes Act of 2015 (Amendment to HR 2029). Congress re-enacted all 50+ expired tax provisions that had expired at the end of 2014 by making some of them permanent, extending a few for 5 years, and extending the remainder for 2 years. The legislation also includes additional provisions that are related to the earned income tax credit, due diligence requirements for child tax credit and the education credit, and other administrative items that will affect tax preparers and taxpayers. This legislation will become law once the President signs it.

The tax provisions that expired at the end of 2014 were re-enacted as follows:

Provisions Made Permanent

Listed below are some of the most relevant provisions that were made permanent:

•  Educator Expense Deduction – Form 1040, line 23
•  Itemized Deduction for Sales Tax – Schedule A, line 5
• Increased Section 179 Expense Deduction Amounts

o   Maximum Deduction: $500,000

o   Maximum cost before the limit is reduced: $2,000,000

• Qualified Real Property category for Section 179 Expense Deduction

o   Maximum deduction: $250,000 for 2015, $500,000 after 2015

o   Qualified property includes: leasehold improvements, restaurant property, and retail improvement property

o   Added air conditioning and heating units beginning in 2016

• Exclusion from income for employer-provided mass transit benefits
• 15 year straight line depreciation for qualified leasehold restaurant and retail improvements
• Employer wage credit for active duty members of the uniformed services
• Research and Development Credit
• 5 provisions related to charitable contributions
• 4 additional provisions related to businesses
• 3 provisions related to real estate investment

The following provisions as they currently exist (but were set to expire at the end of 2017) were also made permanent:

•  Income threshold for Additional Child Tax Credit is permanently set at $3,000
•  Enhanced American Opportunity (Education) Credit
•  Expanded Earned Income Tax Credit

Provisions Extended for 5 Years (2015 – 2019)

• 50% Bonus Depreciation
• Work Opportunity Credit and New Markets Credit

Provisions Extended for 2 Years (2015 and 2016)

The remaining 30 expired provisions were extended for two years. Here is a list of some of the more relevant provisions for individuals:

• Exclusion of gain from income of foreclosed home mortgage debt (Form 982, line 1e)
• Tuition and Fees Deduction - Form 8917/Form 1040, line 34
• Nonbusiness Energy Property Credit – Form 5695, Part I
• Ability to treat mortgage insurance premiums as qualified mortgage interest
• 14 provisions related to businesses
• 12 additional provisions related to energy and conservation

Other New Provisions

The legislation also included what Congress is calling “program integrity provisions,” all of which go into effect beginning with Tax Year 2016 as follows:

• The due date for employers to file with SSA and IRS Form W-2s and 1099s will be January 31 beginning in 2017 for 2016 wage and information forms.
• The provisions expand paid preparer EITC due diligence requirements and the associated $500 penalty to include the child tax credit and the American Opportunity Education credit.
• The IRS can now bar an individual whom has fraudulently claimed the earned income tax credit for ten years.
• The IRS can bar an individual whom has intentionally disregarded the rules from claiming the child tax credit and/or the American Opportunity Credit for two years.
• The provisions prohibit a taxpayer from retroactively claiming the earned income tax credit, child tax credit, or American Opportunity Education Credit for any year the individual or qualifying child did not have a taxpayer identification number.
• There is an increase to the penalty for tax preparers who engage in willful or reckless conduct to the greater of $5,000 or 75% of the preparer’s income with respect to the return.
• There is now a requirement that the EIN of an educational institution be reported on Form 8863.

For more details and a complete list of all the provisions included in this legislation see the following:

• House Ways and Means Section-by-Section Summary of the Proposed “Protecting Americans From Tax Hikes Act of 2015 
• Joint Committee on Taxation’s Technical Explanation of  The Protecting Americans From Tax Hikes Act of 2015

Form 1095-A, Health Care Exemptions, and Individual Shared Responsibility Payment (Penalty) for 2015

As we approach the beginning of the 2016 filing season, here are some reminders about the Form 1095-A, exemptions from the requirement to have health insurance, and the increase in the individual penalty (individual shared responsibility payment) amount for 2015 federal income tax returns.

Importance of Form 1095-A 
In early 2016, the Form 1095-A (Health Insurance Marketplace Statement) will be received by the approximately 10 million individuals that obtained their 2015 health insurance at the Federal or a State Marketplace. The Form 1095-A is needed by these taxpayers in order to complete the 2015 Form 8962 (Premium Tax Credit) to calculate their premium tax credit for 2015 and, for those who received a subsidy, to complete the reconciliation of the subsidy with the actual credit.

The 1095-A should be received:

• By those who used the Federal Marketplace – by January 31, 2016
• By those who used a State Marketplace – Early February 2016

A copy of the Form 1095-A will be available online for those who used the Federal Marketplace via their account on healthcare.gov. It may also be available online for those who used a State Marketplace as well.

Also, any taxpayer that received a subsidy must complete the Form 8962 and include it with their 2015 federal return. If the Form 8962 is not included with the original federal return, the processing of the return will not be completed until a completed Form 8962 is sent to the IRS.

Health Care Coverage Exemptions
Most individuals who did not have health insurance for all or part of 2015 probably qualified for an exemption. Therefore, it is important that before any penalty is calculated that an individual determines whether they may qualify for a health care coverage exemption.

If an individual qualifies for a health care coverage exemption, they must complete the applicable parts of the 2015 Form 8965 (Health Coverage Exemptions) and include it with their 2015 federal return.

To see a full listing of the exemptions and whether the applicable exemption must be applied for at the federal marketplace or can be requested when the 2015 federal return is filed, see the Health Care Exemptions section of the How the Affordable Care Act Affects Individuals on the Crosslink Tax Resource Center.

If an individual needs help in determining whether they qualify for an exemption, a Find Exemptions tool is available on the healthcare.gov website.

Individual Penalty (Shared Responsibility Payment) for 2015
If it is determined that an individual does owe a penalty for 2015, it is calculated as the greater of: 

• 2% of the individual’s income that exceeds their 2015 filing threshold (personal exemptions plus standard deduction for their filing status);

Or

• A flat dollar amount that is assessed for the taxpayer, spouse, and dependents as follows:
  • $325 for taxpayer, spouse, and dependents over age 18
  • $162.50 for each dependent under age 18
  The maximum family flat dollar amount for 2015 is $975.

The penalty amount is limited for 2015 to the annual national average premium for a bronze level health plan available through the Marketplace which is $2,484 per individual ($207 per month per individual) with a cap of $12,470 for a family with five or more members ($1,035 per month).

See pages 13 – 17 of the draft 2015 Form 8965 Instructions for more information on how the penalty is calculated.

Additional Affordable Care Act Related Information Returns that Individuals May Receive for Health Care Coverage for 2015

Beginning in early 2016, individuals will begin to receive new Affordable Care Act (ACA) related information returns regarding their 2015 health insurance coverage. It is important to note that the following two information forms are for informational purposes only and are not needed to complete an individual’s 2015 federal tax return. The purpose of these forms is to inform individuals that they had health insurance for 2015, who was covered by their policy, and how many months they had coverage.

Form 1095-B (Health Coverage)
All health insurance issuers (insurance companies), self-insured employers, government agencies, and other entities that provided health insurance coverage to individuals during 2015 will be required to send each individual they covered a Form 1095-B (Health Coverage).

All individuals that had health insurance coverage during 2015 will receive a Form 1095-B in early 2016. If the individual had coverage from more than one health insurance provider during the year they will receive a Form 1095-B for each one.

The Form 1095-B will give the individual health insurance policy holder the following information:

• The name, address, and SSN of each person covered by the policy
• The number of months each person was covered during the year
• The name of the health insurance issuer
• Name of Employer (if it is employer sponsored coverage)

The Form 1095-B is proof that the taxpayer and his/her dependents were covered by health insurance for all or part of 2015.

None of the information that is on the Form 1095-B is entered on the 2015 federal tax return. Therefore, it is not necessary for an individual to have received a Form 1095-B in order to complete and file their 2015 federal tax return.

Form 1095-C (Employer Provided Health Insurance Offer and Coverage)
All individuals that worked for a company that was considered an applicable large employer (employed 50 or more full-time equivalent employees) and received or were offered health insurance coverage during 2015 will receive a Form 1095-C (Employer Provided Health Insurance Offer and Coverage) in early 2016 from their employer.

The Form 1095-C will inform the employee of the following:

• Name, address, and SSN of the employee
• Name and SSN of the employee’s dependents that were covered and for which months they were covered during 2015
• Name, address, and EIN of Employer
• For those who elected not to receive coverage, information on the coverage offered

The Form 1095-C is proof that the taxpayer and his/her dependents were covered by health insurance for all or part of 2015 by their employer.

None of the information that is on the Form 1095-C is entered on the 2015 federal tax return. Therefore, it is not necessary for an individual to have received a Form 1095-C in order to complete and file their 2015 federal tax return.