If an individual goes without qualifying minimum essential coverage for more than a single period of up to three months in a year, he or she may owe a penalty under the Shared Responsibility payment. These have been in place since 2014 and the penalty increases annually. In 2016, it is the higher of these amounts:
- 2.5% of annual household income above the tax filing threshold to a cap of the national average bronze plan premium OR
- $695/adult and $347.50/child under 18 to a maximum penalty of $2,085 per family
Certain exemptions do apply in the case of hardships, certain life events, and other situations. In addition, those who have no affordable coverage because the cost of annual premiums exceeds 8 percent of their household income are also exempt. One needs to apply for exemption.
The Internal Revenue Service announced today that the nation’s tax season will begin Monday, Jan. 23, 2017, and reminded taxpayers claiming certain tax credits to expect a longer wait for refunds.
The filing deadline to submit 2016 tax returns is Tuesday, April 18, 2017, rather than the traditional April 15 date. In 2017, April 15 falls on a Saturday, and this would usually move the filing deadline to the following Monday — April 17. However, Emancipation Day — a legal holiday in the District of Columbia — will be observed on that Monday, which pushes the nation’s filing deadline to Tuesday, April 18, 2017. Under the tax law, legal holidays in the District of Columbia affect the filing deadline across the nation.
Key Changes to the Tax Rate:
- Standard Deduction – Increased by $50 for a head of household, but stayed the same for single filers and married people filing separate returns, as for married couples filing jointly stayed the same in 2016.
- Gift Tax – Remains the same at $14,000
- Alternative Minimum Tax – increased marginally to keep up with inflation.
- Single Filers – Exemption $53,900 and starts to phase out at $119,700
- Married Jointly – Exemption $83,800 and starts to phase out at $159,700
For the tax year 2016, the 28 percent AMT tax rate applies to taxpayers with taxable incomes above $186,300 ($93,150 for married individuals filing separately).
- Personal Exemptions – Increased by $50, however, the exemption is subject to a phase-out that begins with adjusted gross income of $259,400
- Married Jointly – starts to phase out $311,300 and completely phases out at $381,900
- Foreign Earned Income Exclusion – Increased by $500 to $101,300
- Earned Income Credit – The EIC for taxpayers filing Jointly who have 3 or more qualifying children is $6,269
- Flexible Spending Arrangement – Contribution limits will increase by $50 to $2,550