Tax Changes Impacting 2016 Federal Income Tax Returns

Whereas rumors swirl regarding the Trump administration’s potential federal tax changes, which will likely impact 2017 income tax returns, there are currently a number of changes impacting 2016 federal income tax returns that individuals and businesses will file in the coming months. Such changes include:

  • For 2016, the standard mileage rate for business use of a vehicle is 54 cents/mile (drops to 53.5 cents/mile for 2017), 19 cents/mile for driving related to medical expenses or moving, and 14 cents/mile for driving related to charitable activities.
  • In addition to out-of-pocket classroom expenses, K-12 educators can claim an above-the-line deduction for up to $250 of professional development courses related to the curriculum they teach.
  • If a taxpayer needs help from an IRS Taxpayer Assistance Center (TAC), they need to call to schedule an appointment as walk-in service has been eliminated. Click here to find the location and telephone number of a local TAC.
  • The due date for filing a Foreign Bank Account Report (FBAR) was June 30 in past years, but has been changed to April 15 (April 18, 2017 for 2016 FBARs). An automatic six-month extension will be granted.
  • Prize money awarded to Olympic and Paralympic medal winners by the United States Olympic Committee are nontaxable if adjusted gross income does not exceed $1 million ($500,000 if married filing separately).
  • In the spring, the Internal Revenue Service will begin utilizing four outside collection agencies to assist with collection of unpaid taxes.
  • The due date for employers to file 2016 W-2 forms is January 31, 2017 regardless of whether paper filing or electronically filing. In prior years, employers had until the end of February to paper file W-2 forms and until the end of March to electronically file W-2 forms. This change was part of the PATH Act legislated in December 2015. It is thought that this accelerated due date will help reduce tax refund fraud, which has been rampant in recent years.
  • The due date for Form 1099-MISC with entries in box 7 for nonemployee compensation is also January 31 following the close of the calendar year, similar to W-2 forms. The due date for filing Form 1099-MISC without box 7 entries, as well as any other 1099 series form, is unchanged.
  • The due date for partnerships filing Form 1065 has been accelerated to the 15th day of the third month following the close of the tax year (previously the 15th day of the fourth month following the close of the tax year). Therefore, calendar year 2016 partnership tax returns are due March 15, 2017. The extension period has been increased from five months to six months, so the extended due date is unchanged.
  • The due date for corporations filing Form 1120 has been pushed back a month to the 15th day of the fourth month following the close of the tax year, except for June 30 fiscal year taxpayers. Extended due dates are either unchanged or longer.
  • The April 15, 2017 filing deadline is pushed back to Tuesday, April 18, 2017 due to Emancipation Day being observed in the District of Columbia on Monday, April 17, 2017. As the national office of the IRS is closed on Emancipation Day, no tax filing or payment can be due on that day. This affects any 2016 income tax return that would normally be due on April 15, 2017, including Form 1040, Form 1041 and Form 1120 (calendar year); balances due with those income tax returns; extension requests for those income tax returns; and first quarter 2017 estimated tax payments.

 

While 2017 is likely to bring significant changes to both individual and corporate taxes, it’s important to remember the changes outlined above as you prepare to file your 2016 tax returns.