2016 TAX YEAR UPDATES

First off the Due date of returns this year is April 18, 2016 because of the Emancipation Day holiday in the District of Columbia – even if you do not live in the D.C. area.

There will be no Federal refunds issued before Feb. 15, 2017 if the taxpayer claimed Earned Income Tax Credit or Additional Child Tax Credit.

Oregon said they will issue NO refunds prior to Feb. 15, 2017.

The reason for this change is due to the amount Identity Theft that is happening with Tax Returns and this will give them the opportunity to cross check income and etc. prior to issuance of any refunds and hopefully cut back on the amount of fraudulent refunds sent out.

There were not many changes this year. There are a few items that expired on December 31, 2016 and unless they are extended by Congress this year will not be available in future tax years. They are:

  • TUITION AND FEES DEDUCTION: An above-the-line deduction that can be as much as $4,000.
  • CANCELLATION OF MORTGAGE DEBT: Individuals can exclude up to $2 million ($1 million if MFS) of cancellation of debt (COD) income from qualified principal residence that is canceled due to their financial condition or decline in value of the residence.
  • PERSONAL ENERGY PROPERTY CREDIT: A tax credit of up to $500 for certain energy saving improvements to a personal residence.  This is subject to a $500 lifetime cap.
  • MORTGAGE INSURANCE PREMIUM DEDUCTION: Premiums for qualified mortgage insurance on debt to acquire construct or improve a first or second residence can potentially be treated as deductible qualified residence interest.

A few other changes for 2016:

Mileage Rates:    Business                     $.54 per mile

Medical & Moving   $.19 per mile

Charitable Services   $ .14 per mile

Personal Exemption Amount went up to $4,050

OREGON NEWS:

The Federal Tax Liability Subtraction increased to $6,500 and the Exemption Credit is $195.

The Oregon 529 contribution amount is $4,620 MFJ and $2,310 for all other filing status.

SPECIAL OREGON MEDICAL DEDUCTION:  If you or your spouse is age 64 or older on December 31, 2016 and you have qualifying medical deductions, you may qualify for the Special Oregon Medical Deduction. Even though you may not be able to deduct them on the Federal Schedule A you may qualify for this deduction on your Oregon taxes. Be sure and speak to you Tax Professional about this.

The Working Family child care credit and the Child and Dependent care credit have expired and are replaced with a new credit.

Oregon has a NEW Working Family Household and Dependent Care Credit

Qualifications for this credit are:

  • Incurred qualified dependent care expenses so the taxpayer ( and spouse if filing joint) can work or look for work
  • The care must be for one or more qualifying individuals
  • Paid qualifying expenses to someone who isn’t the spouse, the parent of the qualifying individual, or a person who can be claimed as a dependent.
  • Qualified expenses were paid by the taxpayer and can’t exceed $12,000 for one qualifying individual, or $24,000 for two or more individuals and can’t exceed the taxpayers (or spouse’s) earned income.
  • Adjusted gross income (AGI) less than the limit for their household.

Qualifying Individual:

  • Qualifying child under the age of 13 whom taxpayer can claim as a dependent
  • Disabled Spouse who wasn’t physically or mentally able to care for themselves and lived with the taxpayer for more than half of the year
  • Any disabled person who lived with the taxpayer for more than half of the year and wasn’t physically or mentally able to care for themselves whom the taxpayer can claim as a dependent, or could claim as a dependent except:

They had gross income of $4,050 or more;

They filed a joint return; or

Taxpayer (or spouse if filing jointly) could be claimed as a dependent on another taxpayer’s 2016 return.

You should keep all receipts from your Care Provider showing that you – the taxpayer – paid for the expenses for care.

Charitable Donation Add – Back:

Charitable donations to organizations that fail to spend at least 30% of their annual functional expenses for program services are no longer deductible on your Oregon return. There are 3 organizations on the list at the Oregon DOJ office. They are:  Dakota Indian Foundation, Inc.; Firefighters Support Foundation, Inc.; and National Veteran Service, Inc. Any donations to these organizations taken on the Federal Return will have to be added back onto Oregon return.

AS ALWAYS IF YOU HAVE ANY CONCERNS OR QUESTIONS DO NOT HESITATE TO CONTACT YOUR TAX PROFESSIONAL.