What's New for 2015 tax filing?

- MyRA accounts. These tax-favored accounts are a form of ROTH IRA account which can be funded by a payroll deduction. Taxpayers can also have their federal tax refund deposited into a MyRA account.

 - Achieving a Better Life Experience (ABLE) account. This is a new type of savings account for individuals with disabilities and their families. For 2015, taxpayers can contribute up to $14,000. Distributions are tax-free if used to pay the beneficiary’s qualified disability expenses. Do not deduct contributions on the taxpayer's return. For details, see Pub. 907

 - Information reporting about employer offer of coverage. If the taxpayer or someone in the taxpayer's family was an employee in 2015, the employer may have sent the taxpayer a Form 1095-C. Part II of Form 1095-C will show whether the employer offered the taxpayer health insurance coverage and information about the offer. If the taxpayer purchased health insurance coverage for 2015 through the Health Insurance Marketplace and wishes to claim the premium tax credit, this information will help you see if the taxpayer is eligible for the credit. Do not attach Form 1095-C to the return. You may also be able to use the information on Form 1095-C to determine if the employer’s offer of coverage is considered affordable for the purpose of determining if the taxpayer is exempt from the Individual Shared Responsibility Payment.

Nonrefundable credits that may offset AMT and regular tax:

  - Child and Dependent Care Credit

  - Credit for the elderly or permanently and totally disabled

  - Child Tax Credit

  - Mortgage Credit

  - American Opportunity Tax Credit and Lifetime Learning Credit

  - Saver's Credit for Retirement Savings Contributions

  - Energy Credits

  - District of Columbia First-Time Homebuyer Credit

DEPENDENT EXEMPTIONS: Dependents cannot claim exemptions for dependents. If a taxpayer can be claimed as a dependent on someone else's return, that taxpayer cannot claim any exemptions for other dependents.

EARNED INCOME CREDIT (EIC): A taxpayer may be able to take the EIC if any of the following apply:

  - Three or more children lived with the taxpayer, and the taxpayer earned less than $47,747 ($53,267 if MFJ)

  - Two children lived with the taxpayer, and the taxpayer earned less than $44,454 ($49,997 if MFJ)

  - One child lived with the taxpayer, and the taxpayer earned less than $39,131 ($44,651 if MFJ)

  - A child did NOT live with the taxpayer, and the taxpayer earned less than $14,820 ($20,330 if MFJ)

  NOTE: The maximum investment income is $3,400.

STANDARD MILEAGE RATES: The 2015 mileage rate is 57.5 cents per mile.

STANDARD DEDUCTION: The standard deduction for most people is as follows:

      Filing Status                      Standard Deduction

      -------------                            ------------------

      Single or MFS                               $6,300

      MFJ or Qualifying Widow(er)      $12,600

      Head of Household                       $9,250

      (See Form 1040 instructions for over 65 or blind.)

ITEMIZED DEDUCTION LIMITATION: Itemized deductions are limited by AGI for tax years after 2012.

For taxpayers under age 65, the deduction threshold for medical expenses was raised to 10% from 7.5% of AGI.

EXEMPTION AMOUNT: The personal exemption amount is $4,000 and is limited by AGI for tax years after 2012.

SELF-EMPLOYMENT INCOME: The maximum amount of self-employment (SE) income subject to Social Security tax is $118,500.

ADOPTION CREDIT: The maximum amount of credit has increased, as has the modified AGI phaseout range.

  - Maximum credit                $13,400

  - Modified AGI phaseout range   $201,010 - $241,010

STUDENT LOAN INTEREST:  The modified phaseout range for the student loan interest deduction has increased.

  - Maximum Interest Deduction      $2,500

  - Modified AGI Phaseout Ranges:

    * Married Filing Jointly (MFJ)   $130,000 - $160,000

    * Single/Head of Household (HOH) $ 65,000 - $ 80,000

MEDICAL SAVINGS ACCOUNTS (MSA): The range and maximum out-of-pocket expenses have increased.

  - Individual coverage   $2,200 to $3,300

  - Family coverage       $4,350 to $6,650

  - Maximum out-of-pocket expenses:

    * Individual coverage  $4,450

    * Family coverage      $8,150

FOREIGN EARNED INCOME: The maximum has increased to $100,800.

Need help with tax filing in 2016? Help is just a phone call away! I look forward to hearing from you. Click this link to view our YouTube video http://youtu.be/KfO0_kmz7qc

Amare Berhie, Senior Tax Accountant

ABA Tax Accounting

amare@abataxaccounting.com

(651) 300-4777, (612)424-1540, (651) 621-5777