Affordable Care Act Reminders for Tax Year 2016 Returns

Though the new Congress and Administration may substantially change the requirements for the Affordable Care Act, its current provisions remain in place for 2016 returns.

As we approach the beginning of the 2017 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 2016 federal income tax returns.

Importance of Form 1095-A

The Form 1095-A (Health Insurance Marketplace Statement) will be received by approximately 10 million individuals that obtained their 2016 health insurance at the Federal or a State Marketplace.

This form is needed in order to complete the 2016 Form 8962 (Premium Tax Credit) which calculates their Premium Tax Credit for 2016 and, for those who received a subsidy, to complete the reconciliation of the subsidy with the actual credit. Read more

Health Care Coverage Exemptions

Most individuals who did not have health insurance for all or part of 2016 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 2016 Form 8965 (Health Coverage Exemptions) and include it with their 2016 federal tax return. Read more

Individual Penalty (Shared Responsibility Payment) for 2016

If it is determined that an individual does owe a penalty for Tax Year 2016, it is calculated as the greater of:

• 2.5% of the individual’s income that exceeds their 2016 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:
• $695 per taxpayer, spouse, and dependents over age 18
• $347.50 for each dependent under age 18

The maximum family flat dollar amount for 2016 is $2,085. Read more

Click here to read the entire CrossLink Tax Update that includes further information about the Form 1095-A, exemptions from the requirement to have health insurance, and the increase in the individual penalty amount for 2016 federal income tax returns.

IRS Announces 2017 Tax Filing Season Start Date

The 2017 Filing Season will begin on Monday, January 23, 2017 the IRS announced today. In its news release, the IRS also reminded taxpayers who will be claiming the Earned Income Tax Credit (EITC) and/or the Additional Child Tax Credit (ACTC) to expect a longer wait for their tax refunds.

The filing deadline to submit 2016 tax returns is Tuesday, April 18, 2017.

Click here to read the full IRS news release.

Federal Tax Law Changes that will Affect 2016 Federal Returns

Beginning with the 2017 filing season, refunds for tax returns that claim EITC or the Additional Child Tax Credit will be held until February 15. Read more . . .

Earned Income Tax Credit (EITC)

• Taxpayers can no longer file an amended return to claim the EITC for any year a qualifying child did not have a Social Security Number.
• Taxpayers whom the IRS finds have fraudulently claimed the credit can now be barred from claiming EITC for 10 years.
• Read More . . .

Child Tax Credit and American Opportunity Education Credit

• These two credits are now subject to the same due diligence requirements as EITC. This is reflected on the revised 2016 Form 8867 (Preparers Due Diligence Checklist). This also means that the Form 8867 must be attached to tax returns that are claiming the Child Tax Credit and/or the American Opportunity Credit.
• The IRS can bar a taxpayer from claiming the Child Tax Credit and American Opportunity Education Credit for two years if they have determined the individual has intentionally disregarded the rules for claiming either of these two credits.
• Read More . . .

Due Dates for Federal Corporate and Partnership Returns

• C Corporations (Form 1120)
  • Calendar year end - April 15
  • Fiscal year end - 15th day of the fourth month after the year end
• Partnerships (Form 1065)
  • Read More . . .

Click here to read the entire CrossLink Tax Update that includes further information about the changes made to federal tax laws that will affect tax returns for the 2017 filing season.

IRS, States, Industry Launch Second Year of Public Awareness Campaign: “Taxes. Security. Together.”

The IRS released the following update earlier today:

WASHINGTON — The Internal Revenue Service and its Security Summit partners today began the second year of their “Taxes. Security. Together.” campaign aimed at encouraging taxpayers to take stronger measures to protect their financial and tax data.

The campaign features a series of security awareness tax tips, a round-up of suggestions at the Taxes. Security. Together. web page and a one-page Publication 4524, Security Awareness for Taxpayers.

“These are common sense tips to help taxpayers ensure the security of their information,” said IRS Commissioner John Koskinen. “The Security Summit partnership between the IRS, states and industry has made great strides but we need taxpayers to ensure their information is secure as well.”

The IRS, state tax agencies and the tax community came together in 2015 to combat tax-related identity theft as a coordinated partnership. But they immediately saw that one partner was missing: taxpayers.

The IRS and its partners need the help of all taxpayers. The Security Summit also needs the help of tax preparers and businesses to share information and help educate clients and employees about security measures. For example:

• Always use security software with firewall and anti-virus protections. Make sure the security software is always turned on and can automatically update. Encrypt sensitive files such as tax records you store on your computer. Use strong passwords.
• Learn to recognize and avoid phishing emails, threatening calls and texts from thieves posing as legitimate organizations such as your bank, credit card company and even the IRS. Do not click on links or download attachments from unknown or suspicious emails.
• Protect your personal data. Don’t routinely carry your Social Security card, and make sure your tax records are secure. Treat your personal information like you do your cash; don’t leave it lying around.

Get Replacement Social Security Tax Forms Online

The following article was release by the Social Security Administration:

Preparing for tax season can seem overwhelming. Some forms and paperwork might be difficult to track down. Social Security has made this much easier with annual Benefit Statements.

An SSA-1099 is a tax form Social Security mails each year in January to people who receive Social Security benefits. It shows the total amount of benefits received from Social Security in the previous year so people know how much Social Security income to report to IRS on their tax return.

For non-citizens who live outside of the United States and received or repaid Social Security benefits last year, we will send form SSA-1042S instead. The forms SSA-1099 and SSA-1042S are not available for people who receive Supplemental Security Income (SSI).

If your clients currently live in the United States and need a replacement form SSA-1099 or SSA-1042S, we have a way for them to get an instant replacement quickly and easily. Encourage your clients to go online and request an instant replacement form with a my Social Security account at http://www.socialsecurity.gov/myaccount.  The online replacement form is available beginning February 1, 2017.

Every working person in the U.S. should create a my Social Security account. The secure and personalized features of my Social Security are invaluable in securing a comfortable retirement — for today and tomorrow.