Once again a new year is behind us and income taxes are coming. In this upcoming tax season of 2016, all Americans will be seeing changes on their tax returns. Congress continues to discuss last-minute income tax bills as of the date of this letter, and you can be assured we stay abreast of all the latest changes as they occur!
In addition to the tax changes, there have been a few changes in the office as well. Sharon Hafemann sold the business to Margaret Bare at the end of last tax season. While the ownership has changed, very little else will. Sharon will continue to work at the office preparing tax returns, her favorite passion (golfing is a close second, though). Hannah Bare returns in the evening as a return preparer as well as 2 new preparers. Linda Bahr will continue as our tax and accounting support. Becky Wintermute will be ready during the day to help schedule appointments while Kelly Roehl returns again in the evening and Saturdays to help. Fort Tax Service now has a website with a lot of information. Please visit forttaxservice.com and let us know what you think.
Affordable Care Act
All Americans will be affected in some manner by the Affordable Care Act from 2010 (some refer to it as Obamacare). 5 new tax forms were released by the IRS as a result of this act for 2014. If you receive a Form 1095 from any issuer/agency, we MUST have all copies to prepare your tax return. If you did not receive a 1095, we must ask you a number of additional questions about insurance coverage so that we can help you avoid any penalties for failure to have health insurance. The 5 new forms will add to this year’s tax preparation bill, courtesy of the Affordable Care Act and the estimated 1-3 hours of additional time on our part to get things right.
Health Care Deductions
2013’s tax bill reduced your deduction for medical costs, including health insurance, for 2015. We will see very few deductions available for medical costs now unless you have substantial bills. The amount of your medical expenses in most cases must now be more than 10% of your income before we can deduct anything. So weigh carefully whether to go to the trouble of summarizing these costs. If you are self-employed, we still need to know how much you paid for health insurance.
ALL deductions of any amount must have a receipt. Any individual contribution over $250 must also have an acknowledgement letter from the charity, and the letter must be dated by the date we file your return. The letter should show the date and amount of any individual contribution over $250, and should also state that no goods or services were received in return for the contribution.
If you have read any news in the last year you know that the IRS is looking closely for offshore accounts. If you have an account, retirement account, or business interest with a value over $10,000 in a foreign country, or a foreign business ownership (not through a mutual fund), please let us know as some special rules will apply to you. There are substantial penalties for failure to disclose these items.
We must obtain Form 1098 from you when you pay mortgage interest. Additionally, if you drew money out on a home mortgage or refinancing, we must have general information on the use of the money according to the IRS.
Children/Student Tax Returns
Because of the Affordable Care Act, allowing a child to file their own return, particularly a student, can cost the child and parent literally thousands of dollars in Health Care penalties and/or credits. Please bring your child’s returns to our office for us to prepare properly. We charge a nominal fee if the child is still a dependent on your return.
If you own rental property, this year the IRS has demanded substantially more information. We now need, FOR EACH PROPERTY SEPARATELY, the physical location, the type of property (single family, duplex, etc.), Forms 1099-K received, and a record (by property) of the number of days rented and the number of days used for personal purposes.
Roth IRA Conversions
You will continue to hear from lots of “experts” this year that you need to convert your retirement account(s) to Roth IRAs. While there are a number of advantages to conversions, there are an equal number of disadvantages that carry some major tax consequences. Please consider carefully. All conversions for 2015 must be completed by December 31, 2015.
Effective January 1, 2013, the amount you could give to one person in one year without any return filing requirement increased to $14,000. Very, very few Americans need to worry about federal estate taxes because of changes in the estate tax limit at the federal level.
If you are in what the press has called the 2% club, be aware that the rest of America will soon be joining you! When the surtaxes on this group of Americans were passed, the President purposefully did not adjust the thresholds for inflation, and in 6 years over 50% of all Americans will pay these surtaxes based on estimated inflation rates. Begin planning now whether you are a 2% club member or not by, in order, maximizing 401-K contributions; utilizing employer-sponsored cafeteria plans to their fullest limit; investigating and using employer sponsored fringe benefits such as child care and education; turn in job expenses for reimbursement; and consider your marital status as your income increases because of the incredible marital penalty built in to the surtaxes. If you receive any Form 1099-K, please be sure to bring it to us. It may have a direct impact on your return.
There are literally hundreds of other changes, extensions and deletions that we will consider this year while preparing your return. Because of these changes, we are requesting everyone have their tax information in to us earlier than normal. Please rest assured that we will utilize our best resources to once again provide you with timely, complete and accurate service while keeping your tax burden to the lowest legal amount.
Please call at your earliest convenience to schedule your appointment at 920-563-6562. Becky or Kelly will be happy to help you get your appointment set.
Thank you again for your continued support.
Margaret and Sharon
Fort Tax Service, Inc.