Victoria C. Brush, Inc.
100 Eighth Avenue
Brooklyn, NY 11215-1554
(718) 638-3338
2016-2017 Tax Highlights
Federal
The following are some highlights of the 2016 and 2017 tax provisions and changes. This list is by no means comprehensive.
Filing Deadline:The filing deadline for your 2016 tax returns is April 17, 2017.
IRS Direct Pay:As an alternative to writing a check with a payment voucher, t. The IRS electronic payment system allows taxpayers to pay their individual tax bills or estimated tax payments online via the following link
Scam Phone Calls: Telephone and email scams continue to proliferate. If you get a phone call from someone claiming to be from the IRS asking for money, hang up andcall the IRS at 1.800.829.1040 to get help and report the scam. Follow the same procedure with a scam email. Never, never click on a link in an email from someone you don’t know or even if it seems to be from someone you do know. The IRS will never initiate contact with you by telephone, email or text messages. Never give out personal information via email or telephone to someone you do not know.
Tax Credits Due Diligence: There has been a tremendous amount of fraud with various tax credit when taxpayers are eligible to receive “new money” in refunds, in excess of any withholdings and estimates reported on their tax returns.Be prepared to provide extensive identity and qualification verification to your tax preparer if you are claiming the Earned Income Tax Credit, the Child Tax Credit, the Additional Child Tax Credit or the American Opportunity Tax Credit.
FBAR Due Date Changed:
The due date for foreign bank and financial account reporting has changed to April 15 instead of June 30.In addition, taxpayers can now request a six-month extension of time to file the FBAR. This is a separate extension from the regular personal tax return extension. . If you have foreign financial accounts holding a combined total of $10,000 or more on any given day during the year, you must file Form 114. Accounts include, but are not limited to, checking, savings, time deposits, securities and brokerage accounts. The penalties for failure to file an FBAR can be severe, so please speak with us if you need to file this report, whether it is for the current year or past years. We can file your FBAR with your tax return, or you can file it yourself at
College Tuition Credit and Deductions:Starting for tax year 2017, colleges must report payments received for qualified tuition on Form 1098-T instead of tuition billed.The IRS will be receiving this information from schools directly. You must also be able to substantiate that the payments were made, so be prepared to supply not only the 1098-T form, but also but also your account transcript from the college bursar’s office, as well as credit card statements, cancelled checks and student loan payments to the school. Important note: The taxpayer eligible to claim the tuition credit is the person claiming the exemption for the student, regardless of who actually paid for the tuition.
Increased Penalties for Failure to File Correct Information Returns (1099 & 1098 Forms):
With a new due date of January 31 for 1099-MISC forms reporting nonemployee compensation, the IRS penalties for failure to file an information return has also increase substantially for tax year 2016. The penalty is $50 to $260 per form depending on how late the return is filed. A new Form 8809 gives 30 days extension to file 1099.
The PATH Act of 2015:Some tax provisions were made permanent in 2015, such as
Educator Expenses: this above-the-line deduction for teachers is now permanent and indexing for inflation after 2015.
Charitable Distribution from IRA: Individuals age 70.5 and older can make tax-free distribution up to $10,000 from an IRA directly to a qualified charitable organization.
The American Opportunity Tax Credit: it provides credit up to $2,500 for qualified educational expenses.
Child Tax Credit & Earned Income Tax Credit: Taxpayers will not receive refund until after February 15, 2017. It remains in effect permanently.
Provisions Expiring December 21, 2016:this is not a complete list
- Credit for residential energy property, except for qualified solar electric/water heating property
- Credit for nonbusiness energy property
- Exclusion of debt discharge income from gross income
- Itemized deduction for mortgage insurance premiums as qualified residence interest
- The above-the-line deduction for qualified tuition and related expenses
IRA Rollovers: You may only make tax-free, penalty-free rollover once per year. A rollover is taking funds from one IRA and moving the funds into a new IRA. The rollover must happen within 60-days. Direct custodian to custodian transfers are not considered a rollover for this purpose. Borrowing funds from an IRA is a prohibited transaction, even if you return it within 60 days.
Affordable Care Act:You will receive form 1095-A, B or C, issued by the Marketplace, your insurance company or your employer to verify that you had health insurance and, for Marketplace policies, what your premium was. For marketplace plans, the form also reports any Advanced Premium Tax Credit you may have received, which now must be reconciled on your tax returns to determine if you are eligible for an additional credit or must repay some of what you got in advance.
Penalty for Not Having Health Inusrance:The annual shared responsibility paymentis the greater of the following.
- 2.5% of taxpayer’s household income in excess of tax filing threshold
- Or family’s flat dollar amount, which is $675 per adult and $347.5 per child, limited to a family max of $2,085. The dollar amount will be adjusted for inflation after 2016.
Premium Tax Credit: You may be eligible for a health insurance premium credit if you purchased coverage through the marketplace exchange. The credit may have been calculated at the time you purchased your insurance, based on your estimated income. It will be recalculated on your tax return using your actual 2016 income and you may be entitled to an additional credit or you may have to repay some of the advance credit you received. If you did not take the advance credit at the time you purchased your insurance, it will be calculated on your 2016 federal tax return. If your filing status is Married Filing Separately, you are not eligible for the credit.
Repair Regulation Safe Harbor Amount:If you file the safe harbor election, business taxpayers can expenses capitalexpenditures up to $2500 (increasedfrom $500 for 2016.)
Standard Mileage Rates: The standard mileage rates for 2016 and 2017 are:
Year / Business / Medical/Moving / Charitable2016 / $0.54 / $0.19 / $0.14
2017 / $0.535 / $0.17 / $0.14
Retirement Plans: Maximum contributions to retirement plans are as follows:
Tax year/Type of plan / 2016 / 2017
401(k), 403(b) elective derrals / $18,000 / $18,000
50 or older / $24,000 / $24,000
SIMPLE IRA / $12,500 / $12,500
50 or older / $15,500 / $15,500
SEP-IRA / 25% of compensation (contribution capped at $53,000) / 25% of compensation (contribution capped at $54,000)
Traditional/Roth IRA / $5,500 / $5,500
50 or older / $6,500 / $6,500
Unmarried Parents: Ifyou are the noncustodial parent and intend to claim your child on your tax return, you must have a written declaration (IRS Form 8332) from your child’s custodial parent that she or he will not claim your child as a dependent for the tax year. That declaration must be signed by the custodial parent and attached to your return. Only the custodial parent is eligible to claim Head of Household, Dependent Care Credit and the Earned Income Tax Credit. The noncustodial parent, if claiming the child, will get the child’s personal exemption, the child tax credit and the educational tuition and fees deduction, if applicable.
2016 Filing Deadlines have Changed
For tax years starting after December 31, 2015, there are some new filing deadline:
Partnership returns, including multiple member LLCs: March 15. Changed from April 15. For fiscal year filers, the tax return is due on the 15th day of the third month following the close of the fiscal year.
C Corporations: April 15. Changed from March 15. For fiscal year filers, the tax return sis due on the 15th day of the fourth month following the close of the fiscal year.
S Corporations: Remain unchanged.
FBAR: April 15, with a possible 6-month extension. Changed from June 30.
New York State LLC: March 15. Changed from the last day of February.
NewYork State
New for 2016 – Identity Verification:Starting with your 2016 tax returns, New York is requiring that you provide data from a state-issued documents with a photograph in order to electronically file your returns and receive your refund. The most commonly used documents will be a New York State driver’s license of a non-driver New York State ID.
New York State Correspondence Audits: New York Statehas been taking the lead on audits for several years now, no longer waiting for the IRS to conduct audits and then coat-tailing on those results. Many taxpayers are getting correspondence requesting documentation directly from the NYS Tax Department, often regarding personal itemized deductions such as medical expenses, employee-related expenses and charitable donations.
There is usually a 30-day window from the date of the letter to wrap up these audits, meaning they must be in receipt of your reply and substantiating documents within the 30-day window. Do not wait until the last minute to respond. If you miss the 30-day window, the State may disallow your deductions without recourse.
Be prepared to substantiate the deductions you are claiming. You are supposed to have your paperwork in order when you prepare your tax returns, but the reality is that many people assume they will be able to collect their documents down the road, if necessary. Please do not make this assumption. It can be very difficult to get copies of cancelled checks and receipts after the fact. Please make sure you have all your back-up documentation organized and stored in a secure place now.
Online Tax Center: New York State has an online tax center where taxpayers can file some of their tax returns and pay taxes due. If you also link your account to us as your tax preparer, we can also look up information about your tax payments, which will help us in preparing more accurate returns for you. It is an easy way to pay your estimated income taxes. If you would like to register with the Online Tax Center, please go to:
Residency: The New York State Department of Taxation & Finance has issued guidelines for determining whether or not someone is a New York State resident. The determination is based on several factors, but the bottom line is that if you have a home available to live in withinNew York State, and you have spent any part of 183 days in the state, New Yorkmay consider you a New York resident. If this is a concern, please speak with us.
MCTMT: The Metropolitan Commuter Transportation Mobility Tax is imposed on net self-employment income of $50,000 or more, as reported on your federal Form SE. It is .34%. For employers, your payroll must be $312,500 or more for a calendar quarter before the MCTMT is imposed.
Occupancy Tax on Rental of 30 days or Less: If you have short term rentals, whether it is renting out your apartment while you are out of town, a vacation home rental or if you run a Bed & Breakfast out of your home, you may need to collect the local occupancy tax on your rental income. This tax is administered at the county level, and you should contact your local tax department for instructions on how to register and pay this tax. Please contact us if you need assistance. If your rental property is in another state, we can help you research the occupancy tax requirements in that state. Occupancy tax does not need to be collected on rental income from year-round tenants in New York State.
Voluntary Disclosure Program: If you have not filed a New York tax return for a past year or have underreported your tax due on any filed return, the New York State Tax Department has made it easier to resolve these problems through its Voluntary Disclosure Program. To be eligible for the program, you must voluntarily disclose a tax liability not already known to the Department (taxes due on assessment notices or matters already known to the Department are not eligible), enter into an agreement to pay it and agree to report and pay future tax liabilities honestly and timely. If you do this, the Department will not impose any penalties (they will still charge interest) and will not prosecute, even if the failure was a criminal offense. You do not need to know the exact amount of your liability in order to register for the program. To disclose a tax liability, go to:
529 College Savings Plans:For any New York resident who is in college, has child in college or would like to save for their children’s future college education, the New York 529 plan is a great deal. As long as the funds in a 529 plan are used for qualified tuition expenses, room and board and certain supplies, the earnings in the accountswill not be taxed. In addition, as long as your 529 plan is a New York State sponsored plan, you can get an immediate deduction on your New York taxable income for the amount of your current year contribution up to $5,000 ($10,000 on a joint return.) To receive the tax credit, the account you contribute to must be in your name; you cannot contribute to a plan established by someone else.
Pension Income Exclusion: New York allows a taxpayer to exclude $20,000 of pension income per year, provided the income is received after the taxpayer has turned 59½ years old. But you must be careful. If you begin to receive retirement income in the year you turn 59½, you will qualify for the exclusion for only the part of the year in which you were 59½. For example, if you turned 59½ on November 1, 2008, and started to receive payment from an IRA in that year, the only portion of your distribution that would qualify for the exclusion would be what you received after October 31st.Also, any annuity you have purchased for yourself does not qualify as pension income.
A beneficiaryof an inherited IRA may also qualify for an exclusion if the decedent would have qualified, but the decedent’s exclusion must be prorated for all qualifying pension distributions and for all beneficiaries.The beneficiaries’ exclusions will also be reduced by the amount of exclusion claimed by the decedent on his or her final return.
Estate Tax Return: New York State basic estate tax exclusion is now being increased each year rather than being fixed at $1,000,000. The exclusion amounts, based on the date of death, are:
From April 1, 2016 through March 31, 2017 $4,187,500
From April 1, 2017 through December 31, 2018 $5,250,000From January 1, 2019 Exclusion indexed for inflation
Since the federal estate tax exclusion is higher than New York’s, you may need to file a New York estate tax return even though you don’t need to file a federal one. However, in order to file your New York return, you will have to prepare a federal return, because a copy of the federal return and calculations must be attached to your New York return.
LLC fee filing deadline: The LLC fee filing deadline for New York State is March 15, 2017.
2017 Corporation Estimated Tax: The First mandatory payment of New York State estimated tax is still March 15, 2017, even though the filing date for C corporations has been moved to April 17, 2017.
NewYork City
NYC Enhanced Real Property Tax Credit: This credit was enhanced starting in 2014. NYC taxpayers with household incomes under $200,000, whether they rent or own, may be eligible.
New York City Unincorporated Business Tax:New York City UBT returns must be filed by all unincorporated businesses once your gross revenue reaches $95,000, even if you don’t owe any tax. If you do owe tax, you will get a partial credit for it on your New York State individual tax return.
You may also deduct charitable donations made through your business bank account on your UBT return, up to 5% of your federal net business income.