With little less than four weeks remaining until you have to file your income tax returns for 2015, I’m sure the last thing you’re interested in is learning what the new inflation-adjusted income brackets for the 2016 tax year are... but you should!
According to the Internal Revenue Service (IRS), which announced the new brackets last October, here are a few of the items of greatest interest to most taxpayers for the 2016 tax year:
· The standard deduction for heads of household rises to $9,300 for tax year 2016, up from $9,250, for tax year 2015.The other standard deduction amounts for 2016 remain as they were for 2015: $6,300 for singles and married persons filing separate returns and $12,600 for married couples filing jointly;
· The personal exemption for tax year 2016 rises $50 to $4,050, up from the 2015 exemption of $4,000. However, the exemption is subject to a phase-out that begins with adjusted gross incomes of $259,400 ($311,300 for married couples filing jointly). It phases out completely at $381,900 ($433,800 for married couples filing jointly.);
· The Alternative Minimum Tax exemption amount for tax year 2016 is $53,900 and begins to phase out at $119,700 ($83,800, for married couples filing jointly for whom the exemption begins to phase out at $159,700). The 2015 exemption amount was $53,600 ($83,400 for married couples filing jointly). For tax year 2016, the 28 percent tax rate applies to taxpayers with taxable incomes above $186,300 ($93,150 for married individuals filing separately), and
· The 2016 tax year maximum Earned Income Credit amount is $6,269 for taxpayers filing jointly who have 3 or more qualifying children, up from a total of $6,242 for tax year 2015. The revenue procedure has a table providing maximum credit amounts for other categories, income thresholds and phase-outs.
Still focused on the 2015 tax year and getting your return completed and mailed by Monday, April 18? The tax tables for 2015 can be located on the IRS’s website at https://www.irs.gov/pub/irs-pdf/i1040tt.pdf.
(A member of the National Association of Tax Preparers as well as the National Society of Accountants, George Sotrillis is a licensed tax preparer with more than two decades worth of tax experience to his credit. The owner of George Sotrillis EA LLC and Integrated, Inc., he is located at 39-22 Bell Blvd, 1st Floor, Bayside NY 11361, and can be contacted directly at 718-352-4680, or by email at firstname.lastname@example.org)
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