What is New on the 2016 1040.

More tax geek talk from Accounting Today.com:



Form 1040—Adjusted Gross Income
Line 23. Educator expenses. Beginning in 2016, this up-to-$250 per educator deduction can include certain expenses for professional development courses related to the curriculum, or to the students, that the educator teaches.
Line 26. Moving expenses. The 2016 standard mileage rate for moving expenses is 19¢ per mile.
Line 32. IRA deduction. In general, an individual who isn't an active participant in certain employer-sponsored retirement plans, and whose spouse isn't an active participant, may make an annual deductible cash contribution to an IRA up to the lesser of:
1.A statutory dollar limit, or
2. 100 percent of the compensation that's includible in his gross income for that year.
For 2016, the statutory dollar limit is $5,500, plus an additional $1,000 for those age 50 or older. If the individual (or his spouse) is an active plan participant, the deduction phases out over a specified dollar range of modified AGI. For 2016, a taxpayer may be able to take an IRA deduction if he was covered by a retirement plan and his 2016 MAGI is less than $71,000 ($118,000 if married filing jointly or qualifying widow(er)). If the taxpayer's spouse was covered by a retirement plan, but the taxpayer was not, he may be able to take an IRA deduction if 2016 MAGI is less than $194,000.
Form 1040—Tax And Credits
Line 40. Itemized deductions or standard deduction. For 2016, the standard deduction is $6,300 for single filers and for married persons filing separately, $12,600 for joint filers and qualifying widow(er)s, and $9,300 for heads of household.
Line 42. Exemptions. The amount of each exemption for 2016 is $4,050. Exemptions are reduced for taxpayers with AGIs in excess of the "applicable amount" ($311,300 for joint filers or a surviving spouse, $285,350 for a head of household, $259,400 for a single individual who isn't a surviving spouse, and $155,650 for marrieds filing separately).
Line 45. Alternative minimum tax. Under Code Sec. 55(d), the alternative minimum tax exemption amount for 2016 is $53,900 ($83,800 if married filing jointly or a qualifying widow(er); $41,900 if married filing separately). The AMT exemption amount is reduced if alternative minimum taxable income is above statutorily defined amounts that depend upon filing status.
Line 54. Other credits. For 2016, the maximum adoption credit is $13,460 per eligible child for both non-special needs adoptions and special needs adoptions. The amount begins to phase out if modified adjusted gross income (MAGI) is in excess of $201,920 and is completely phased out if MAGI is $241,920 or more.
Form 1040—Other Taxes
Line 57. Self-employment tax. Maximum amount of self-employment income subject to FICA tax is $118,500; there is no ceiling on Medicare wage base.
An individual may use the farm optional method only if:
a. His gross farm income was not more than $7,560 or
b. His net farm profits were less than $5,457.
Using this method, farm self-employment earnings equals the smaller of:
1. Two-thirds of gross farm income, or
2. $5,040.
An individual may use the nonfarm optional method only if:
a. His net nonfarm profits were less than $5,457 and also less than 72.189 percent of his gross nonfarm income and
b. He had net earnings from self-employment of at least $400 in 2 of the prior three years.
Individuals may compute their self-employment earnings as the smaller of two-thirds of gross nonfarm income or $5,040.
A self-employed individual with both farm and nonfarm incomes is allowed to use both optional computation methods if the farm income qualifies for the farm optional method and the nonfarm income qualifies for the nonfarm optional method. If both optional methods are used to compute net earnings from self-employment, the maximum combined total net earnings from self-employment for any tax year can't be more than $5,040.
Line 61. Health care: individual responsibility. As was the case in 2015, a taxpayer must either:
• Indicate on line 61 that he, his spouse (if filing jointly) and his dependents had health care coverage throughout 2016;
•    Claim an exemption from the health care coverage requirement for some or all of 2016 and attach Form 8965; or
•    Make a "shared responsibility payment" if, for any month in 2016, he, his spouse (if filing jointly) or his dependents did not have coverage and do not qualify for a coverage exemption.
However, the monthly shared responsibility payment amount has increased for 2016. For 2016, it is the lesser of:
i. The sum of the monthly penalty amounts for months in the tax year during which one or more failures occurs, or
ii. The sum of the monthly national average bronze plan premiums for the plan.
The monthly penalty amount is equal to 1/12 of the greater of $695 per family member (up to a ceiling of $2,085) or 2.5 percent of the amount by which the taxpayer's household income exceeds the filing threshold.
Form 1040—Payments and Refunds
Line 66. Earned income tax credit (EITC). The maximum credit is higher, and the AGI-based phaseout figures are revised.
Line 71. Excess social security and RRTA tax withheld. Maximum Social Security (OASDI) tax for 2016 is $7,347 (computed on the first $118,500 of wages) for purposes of credit for excess tax withheld.
Line 73. Credits. Line 73, box b is labeled as "Reserved". The draft instructions contain no information on this box. The final version of 2015 Form 1040 also had this box labeled as "Reserved".
Lines 74-77. Refund. Effective for credits or refunds made after Dec. 31, 2016, the IRS can't issue refunds before February 15 (thus, before Feb. 15, 2017 for 2016 returns) for returns that claim the earned income credit and/or the additional child tax credit. This rule applies to the entire refund, not just the portion associated with those credits.
Line 78. Amount you owe. The Form 1040 instructions reflect the fact that IRS2GO is the IRS mobile application; taxpayers can access "Direct Pay" or "Pay By Card" by downloading the application.





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Long waits for refund checks. New law delays tax refunds until Feburary 15, 2017.

A new federal law moves up the W-2 filing deadline for employers and small businesses to Jan. 31. The new law makes it easier for the IRS to find and stop refund fraud. It also delays some taxpayer refunds. Those taxpayers claiming the Earned Income Tax Credit or the Additional Child Tax Credit won’t see refunds until Feb.15, at the earliest.
Here are some key points to keep in mind:

• Protecting Americans from Tax Hikes (PATH) Act. Enacted last December, the new law means employers need to file their copies of Forms W-2  by Jan. 31. These forms also go to the Social Security Administration. The new deadline also applies to certain Forms 1099. Those reporting nonemployee compensation such as payments to independent contractors submitted to the IRS are due Jan. 31. Employers have long faced a Jan. 31 deadline in providing copies of these forms to their employees. That date won’t change.
• Different from past deadline. Employers normally had until the end of February, if filing on paper, or the end of March, if filing electronically, to send in copies of these forms. The IRS is working with the payroll community and other partners to spread the word.  
• Helps stop fraud or errors. The new Jan. 31 deadline will help the IRS to spot errors on returns filed by taxpayers. Having these W-2s and 1099s sooner will make it easier for the IRS to verify legitimate tax returns and get refunds to taxpayers eligible to receive them. The changes will allow the IRS to send some tax refunds faster.
• Some refunds delayed. Certain taxpayers will get their refunds a bit later. By law, the IRS must hold refunds for any tax return claiming either the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) until Feb. 15. This means the whole refund, not just the part related to the EITC or ACTC.
• File tax returns normally. Taxpayers should file their returns as they normally do. The IRS issues more than nine out of 10 refunds in less than 21 days. However, some returns may need further review. Whether or not claiming EITC or ACTC, the IRS cautions taxpayers not to count on getting a refund by a certain date. Consider this fact when making major purchases or paying debts.
• Use IRS.gov online tools. Starting Feb. 15, the best way to check the status of a refund is with the Where's My Refund? tool on IRS.gov or the IRS2Go Mobile App.

Taxpayers should keep a copy of their tax return. Beginning in 2017, taxpayers may need their Adjusted Gross Income amount from a prior tax return to verify their identity. They can get a transcript of their return at www.irs.gov/transcript.


IRS special edition tax tips dated 11-01-16