The new year is quickly approaching, which means tax season isn’t far behind. Looking ahead to April, it is important to review the tax updates and changes that took place in 2015 while looking ahead to the changes that 2016 has in store. Amid various types of legislation, reform and other recent developments that will affect both individuals and business entities as they prepare for tax season, we’ve picked out four significant factors you’ll want to consider as you plan ahead for April 2016.
Affordable Care Act Provisions
The Affordable Care Act has brought with it numerous tax implications for both individuals and business entities this year. In particular, one provision states that individuals who do not have health insurance for a total of two or more months in 2015 may be required to pay a penalty on their tax returns in 2016. Additionally, ACA-mandated health care coverage requirements and reporting rules are different for small businesses compared to large businesses, so it is important to understand the difference when advising clients during the spring of 2016.
Net Investment Income Tax Requirements
Individuals who receive income from investments—including interest, dividends, rental/royalty income, non-qualified annuities and capital gains—may be required to pay the Net Investment Income Tax this season, particularly if their income exceeds a certain amount. Help your clients plan ahead and avoid tax penalties by ensuring that they understand the ins and outs of this tax with regard to filing status, income thresholds and reporting processes.
IRS Priority Projects
On July 31, 2015, the IRS released its Priority Guidance Plan for 2015-2016. The plan outlines 277 projects that the IRS intends to focus on from July 2015 through July 2016, including projects from international taxation to health care to implementation of legislative changes. Because the report includes specific line items, it serves as a valuable resource for understanding upcoming tax issues and engaging in financial planning for 2016.
2016 Filing Deadline Changes
While filing annual tax returns may seem like business as usual, you’ll want to bear in mind the deadline changes that may affect this year’s timeline. In observance of Emancipation Day, which falls on Friday, April 15, 2016, taxpayers have until Monday, April 18, 2016 to file their federal tax returns this year (with the exception of taxpayers in Maine and Massachusetts, who have until Tuesday, April 19, as Patriot’s Day falls on April 18).
The Affordable Care Act, net investment income tax, IRS Priority projects and changes in filing deadlines are all significant factors that will require special attention this tax season, but these are only a few examples of legislation that will necessitate extensive tax planning this year. To learn more about all of the latest tax issues and new proposals on tax law changes, download Surgent’s webinar: “The Best Federal Tax Update Course by Surgent (BFTU).”