Get Prepped: 2016 Tax Information

Get Prepped: 2016 Tax Information

With tax season in full swing, we’re sure the last thing you want to think about is next tax season.

However, the IRS recently announced the annual inflation adjustments for the 2016 tax schedule, and it’s definitely information worth knowing. Tax rate schedules, tax tables, and cost-of-living adjustments are all on the list.   

Take a look at the images below, courtesy of Forbes, for tax brackets for the 2016 tax season.

Individuals:

Screen Shot 2016-04-07 at 7.03.49 PM

Married Filing Jointly:

Screen Shot 2016-04-07 at 7.04.44 PM

Married Filing Separately:

Screen Shot 2016-04-07 at 7.05.10 PM

Head Of Household:

Screen Shot 2016-04-07 at 7.05.38 PM

For taxpayers filing single, the standard deduction amount is $6,300. Married filing jointly is $12,600 and married filing separately is $6,300. The standard deduction rate for head of household is $9,300.

Aged or blind taxpayers have a standard deduction amount of $1,250, and if the taxpayer is unmarried and not a surviving spouse, the deduction increases to $1,550.

If you itemize your deductions, the limitations can cap or phase out some deductions for high income individuals. If these limitations apply to you, your itemized deductions total is reduced by the lesser of 3% of the AGI above the threshold, or 80% of the amount of itemized deductions.

Some of the most common tax deductions, deferral, and exclusion changes for 2016 include student loan interest, foreign earned income exclusion, transportation and parking benefits, as well as medical savings accounts. The max amount you can deduct for student loan interest will remain at $2,500 for 2016.

Foreign earned income inclusion went up $500, and the monthly limitation for qualified parking fringe benefits went up from $250 to $255.

Individuals with who have self only medical coverage have a higher annual deductible for 2016, while family coverage stays the same.

Here are a few of the tax credits that were adjusted for 2016: Earned Income Tax Credit, Child & Dependent Care Credit, Adoption Credit, Hope Scholarship Credit, as well as the Lifetime Learning Credit.

For further information on tax credits, deductibles, and rates and how they apply to you, contact Paragon Accountants today!