Baxter Tax Consulting

What’s new for this tax season?

The following summarizes important changes for the tax year:

Information reporting about health coverage

If you or someone in your family had health coverage in 2015, the provider of that coverage is required to send a Form 1095-A, 1095-B, or 1095-C (with Party III completed) by January 31, 2016, that lists individuals in your family who were enrolled in the coverage and shows their months of coverage. Use this information to help complete your return. You do not need to attach these forms to your return. You may have had health care coverage for some or all of 2015 even it you didn’t receive a form with this information.

Information reporting about employer offer of coverage

If you or someone in your family was an employee in 2015, the employer may have sent you a Form 1095-C. Part II of Form 1095-C will show whether your employer offered you health insurance coverage and information about that offer. If you purchased health insurance coverage for 2015 through the Health Insurance Marketplace and wish to claim the premium tax credit, this information will help you see if you are eligible for the credit. You do not need to attach Form 1095-C to your return. If you do not wish to claim the premium tax credit for 2015, you do not need the information in Part II. Form 1095-C may include information in Part III if you, or others in your family, enrolled in an employer’s health plan.

Health care individual responsibility payment increased

If you or someone in your household didn’t have qualifying health care coverage or qualify for a coverage exemption for one or more months of 2015, the amount of your shared responsibility payment may be much higher this year than it was last year. Like last year, you must do one of the following:

• Indicate on your tax return that you, your spouse (if filing jointly), and anyone you can or do claim as a dependent had qualifying health care coverage throughout 2015.
• Claim an exemption from the health care coverage requirement for some or all of 2015 and attach Form 8965 to your return.
• Make a shared responsibility payment if, for any month in 2015, you, your spouse (if filed jointly), or anyone you can or do claim as a dependent didn’t have coverage and does not qualify for a coverage exemption.

Requirement to reconcile advance payments of the premium tax credit

If you or a family member enrolled in health insurance through the Marketplace and advance payments of the premium tax credit were made to your insurance company to reduce your monthly premium payment, attach Form 8962 to your return to reconcile (compare) the advance payments with your premium tax credit for the year, which you figure on Form 8962. The Marketplace is required to send Form 1095-A by January 31, 2016, listing the advance payments and other information you need to figure your premium tax credit. Use Form 1095-A to complete Form 8962. Attach Form 8962 to your return. Do not attach Form 1095-A to your return.

Achieving a Better Life Experience (ABLE) Account

This is a new type of savings account for individuals with disabilities and their families. For 2015, you can contribute up to $14,000. Distributions are tax-free if used to pay the beneficiary’s qualified disability expenses. Don’t deduct your contributions on your tax return.

Due date of return

File your tax return by April 18, 2016. The due date is April 18, instead of April 15, because of the Emancipation Day holiday in the District of Columbia – even if you do not live in the District of Columbia. If you live in Maine or Massachusetts, you have until April 19, 2016. This is because of the Patriots’ Day holiday in those states.

Public safety officers

Certain amounts received because of the death of a public safety officer are nontaxable.

Certain charitable contributions

A special rule applies to cash contributions made between January 1, 2015 and April 15, 2015, to benefit families of slain New York detectives Wenjian Liu or Rafael Ramos.

Direct deposits of refund to a myRA® account

You now can have your refund directly deposited to a new retirement savings program called a myRA®. This is a starter retirement account offered by the Department of the Treasury.

Health coverage tax credit

The health coverage tax credit, which expired at the end of 2013, has been reinstated retroactive to January 1, 2014.

Additional child tax credit

You can’t claim the additional child tax credit if you file Form 2555 Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion.

My Social Security Account

Social security beneficiaries can now get a variety of information from the SSA website with a my Social Security account.

Expired tax benefits

At the time this publication was prepared for printing, certain tax benefits had expired. These included the following:

• Tuition and fees deduction.
• Deduction for educator expenses in figuring adjusted gross income.
• Deduction for state and local general states taxes.
• The exclusion from income of qualified charitable distributions from IRAs.
• Credit for certain nonbusiness energy property.
• Deduction for mortgage insurance premiums.

You can find out whether legislation extended these and other tax benefits to allow you to claim them on your 2015 return.

Application of one-rollover-per-year limit for IRAs

Starting in 2015, you can make only one rollover from one IRA to another (or the same) IRA in any 1-year period regardless of the number of IRAs you own. However, you can continue to make unlimited trustee-to-trustee transfers between IRAs because this type of transfer is not considered a rollover. Also, there is no limit to the number of rollovers from a traditional IRA to a Roth IRA (also known as conversions).

Reminders

Automatic 6-month extension to file tax return

You get an automatic 6-month extension of time to file your tax return.

Refund on a late filed return

If you were due a refund but you did not file a return, you generally must file your return within 3 years from the date the return was due (including extensions) to get that refund.

Frivolous tax returns

The IRS has published a list of positions that are identified as frivolous. The penalty for filing a frivolous tax return is $5,000.

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