Tax season begins as IRS begins to accept returns

by MPA20 Jan 2016

Taxpayers who didn't have coverage in 2015 or didn't qualify for an exemption from coverage will face significantly higher penalties than last year, meaning a bigger tax bill come April or a smaller refund.

"The fee is calculated two different ways - as a percentage of your household income and per person,'' according to the federal website "You'll pay whichever is higher.''

For those who don't qualify for an exemption, the penalty for not having insurance in 2015 is generally the greater of $325 per person or 2 per cent of taxable income over the filing threshold up to certain limits.

Last year was the first time penalties were collected. Recently released IRS numbers indicate that 7.9 million households paid fines averaging $210 apiece on their tax returns for 2014. The penalties then were lower _ $95 for the flat fee, or 1 per cent of taxable income.

Many lower-income people are exempt from the penalty, so taxpayers should check if they qualify for an exemption (use Form 8965 to do so).

About 3.5 million returns were filed that included the health insurance premium tax credit _ a key part of the health care law.

Taxpayers can either get the credit in advance when buying insurance through the exchanges or receive it as a refund on their taxes. Either way, they need to fill out Form 8962 and attach it to their return.

Same-sex married couples should have an easier time filing taxes as a result of a Supreme Court decision last June. With gay marriage now recognized across the nation, gay and lesbian couples can file as married, filing jointly on both their state and federal returns.

Greene-Lewis said that before the ruling, some couples had to prepare as many as five separate returns. Now, she said, ``The process is as any married couple.''

Congress acted in mid-December to extend about 50 expiring tax breaks for individuals and businesses. ``Some of the credits and deductions which are pretty popular with people have been extended permanently,'' Pickering said.

The American Opportunity Tax Credit, for example, provides eligible students with a maximum annual credit of $2,500 for the first four years of college. The congressional action making it permanent helps students or their parents plan four years out, she said.

Congress also made permanent the $250 above-the-line deduction for elementary and secondary-school teachers who use their own money to buy school supplies, as well as the deduction for state and local sales taxes, primarily designed for people who live in states without a state income tax.

As part of the legislation, small-business owners will be able to take a deduction right away for up to $500,000 in eligible property without depreciating it.

Also made permanent was the expanded and enhanced earned income tax credit for taxpayers with three or more children. ``It's really a lifeline for low-income working families,'' Pickering said.

read more > 1 2 3 4


Should CFPB have more supervision over credit agencies?