For those of you who have already filed your taxes – well done, you’re ahead of the game! But we have a strong feeling some of you have yet to file.
Do you know what to expect when filing your 2015 taxes? There are some changes this year that may affect your return.
So whether you’re filing yourself or using a professional, here are 5 new changes you need to know before you file.
1. Obamacare Penalties Are Only Going Up
As of 2014, the government has required all citizens and legal residents to obtain government approved health insurance, or pay a fine. At that time, the penalty per adult was $95 or 1 percent of household income. This year, it’s up to $325 or 2 percent of household income per adult. And in 2016? A whopping $695 or 2.5 percent of household income per uninsured adult. (Source: HealthCare.gov)
If you have any confusion, we highly recommend speaking to your tax professional or visiting Healthcare.gov for more information.
2. Audits Will Be Fewer – Unless you’re Wealthy and Live Overseas
Thanks to a Congress-approved $290 million budget raise for the IRS, audits overall will be down this year. That’s because the budget hike was specifically meant to be used towards improving IRS customer service issues, not tax compliance. (Source: USA Today)
That being said, the wealthy minority will face a higher chance of being audited, especially those bringing in more than $1 million. According to a report by Bloomberg Business, those bringing in over $1 million annually have a 7.5 percent chance of being audited. Luckily, this chance seems to be going down – except for the wealthy taxpayers who live overseas. Their audit rates have increased over the past few years, thanks to new laws and regulations that have made their tax filing much trickier than before. (Source: Bloomberg)
3. The IRS is Taking New Security Measures against Identity Theft
Tax-filing related identity theft is a nightmare, and the IRS has become more and more concerned with the threat. The common story in recent years has been about criminals using others’ identities to file false tax returns.
But this year, the IRS has taken extra steps to prevent this from happening. They have teamed up with the states and the tax industry to find even more ways to protect your federal and state tax accounts from identity thieves. While many of these steps will not be noticeable, one main component of the plan is new, heightened password standards for tax software. (Source: IRS)
4. Expect Better IRS Customer Service than Last Year – But Still Not Good
Remember that $290 million budget increase for the IRS we mentioned earlier? According to IRS Commissioner John Koskinen, that will help increase the percent of phone calls answered from 37 percent to 47 to 50 percent.
5. New Tax Deadline This Year – But Try Not to Procrastinate
If you haven’t heard, this year’s tax deadline for personal, partnership or calendar year estates/trusts tax returns is April 18th thanks to Emancipation Day being celebrated in Washington D.C. For those of you who are e-filing, this gives you an “extra” three days to get all your paperwork together.
But for those of you who are filing with a tax professional, you’ll want to get your taxes to them earlier – much earlier. With all the new changes, literally hundreds, to consider this year, the earlier you can get your documents to your tax accountant the better.
Have questions about your tax or investment strategy? Feel free to give us a call at Walsh & Associates. We are financial advisors that specialize in a fully comprehensive wealth management – which includes tax strategies!
Securities offered through LPL Financial member FINRA/SIPC. Financial planning and investment advice offered through Walsh & Associates, a registered investment advisor. Walsh & Associates is a separate entity from LPL Financial.