news for procrastinators. The IRS is giving everyone a few
extra days to complete their 2016 federal income returns this
According to the IRS:
The filing deadline to submit 2016 tax returns is Tuesday, April 18, 2017,
rather than the traditional April 15 date. In 2017, April 15 falls on a
Saturday, and this would usually move the filing deadline to the following
Monday — April 17. However, Emancipation Day — a legal holiday in the District
of Columbia — will be observed on that Monday, which pushes the nation’s filing
deadline to Tuesday, April 18, 2017. Under the tax law, legal holidays in the
District of Columbia affect the filing deadline across the nation.
Extensions to file
- If you cannot file by the due date of your return, then you can request an
extension of time to file. To receive an automatic 6-month extension of time to
file your return, you can file
by the due date of your return. See
Topic 304 [see below]
information. However, an extension of time to file is
extension of time to pay. You will owe interest on any past-due tax and you may
be subject to a late-payment penalty if the payment of tax is not made by the
original due date of your return
[and the amount of taxes you owe
exceeds 10% of your total tax liability]
Topic 304 - Extensions of Time to File Your Tax Return
There are three ways to request an automatic extension of time to
file your U.S. individual income tax return. The request for
extension of time to file must be made by the regular due date of
your return to avoid the penalty for filing late. An extension of
time to file is
an extension of time to pay.
may file your extension in any one of three ways listed below:
Form 4868 (PDF), Application For Automatic Extension of Time To File U.S.
Individual Tax Return, using your personal computer
or through a tax professional.
File a paper Form 4868 and enclose payment of your estimate of
you file the Form 4868 electronically, be sure to have a copy of
your prior year's return; you will be asked to provide your prior
year's adjusted gross income (AGI) amount for verification purposes.
Once you file, you will receive an electronic acknowledgement that
the IRS has accepted your filing. Keep this for your records.
the Country – You are allowed two extra months (generally until
June 15) to file your return and pay any tax due without requesting
an extension if you are a U.S. citizen or resident alien, and on the
regular due date of your return you are either living outside of the
United States and Puerto Rico, and your main place of business or
post of duty is outside of the United States and Puerto Rico, or in
military or naval service on duty outside of the United States and
Out Some Articles About Extensions Written for Prior Years' Newsletters:
Below are some
informative articles we posted during April of the prior years addressing the
April 15th deadline:
we approach the final stretches of tax season and the looming
April 18th filing deadline, we wanted to share some
observations from the past couple months working with our
observation we’ve had as a firm is the interesting way in which tax information
is circulated throughout the professional community. The cycle appears to go
something like this:
Congress enacts new tax laws and provisions.
In the first
year or two after these tax changes occur, the accounting profession must
learn the myriad rules and how to process any accompanying tax documents,
and then learn how to educate their clients on the tax implications for
these new rules.
This begins a
period of adaption for both accountants and clients, as tax strategies are
developed to suit everyone’s individual circumstances.
after a period of four or five years, we all get the hang of it.
invariably Congress passes new tax laws and the learning curve starts all
A good example of
this educational cycle is the Roth conversion. A Roth conversion is simply a
conversion of a traditional IRA into a Roth IRA, also known as a “Backdoor
Roth”. Prior to 2010, Congress had imposed strict income limits on a person’s
ability to convert a traditional IRA into a Roth. In 2010, however, they lifted
these income limits, allowing anybody to make a conversion. While some of our
clients took advantage of the law in the early years after its enactment, we
have noticed a huge upsurge in the number of our clients who have made Roth
conversions in the past couple years. For these clients, making a traditional
non-deductible IRA contribution and then immediately converting this to a Roth
IRA has become almost second nature.
Of course, we
still do encounter questions and confusion about Roth conversions, and a Roth
conversion isn’t the right strategy for everyone. Taxpayers must be wary of the
dreaded “cream in the coffee” problem in which a Roth conversion can become
taxable by the percentage that a person has money in pre-tax IRA accounts,
including SEP IRAs. For this reason, we tell clients to check with us before
making a Roth conversion for the first time.
Another trend we
have recently noticed is the uptick in the number of clients with Health Savings
Accounts (HSAs). With the rising cost of health care, many employers are
offering high-deductible health care plans with an accompanying Health Savings
Account and making contributions into the HSA on behalf of their employees. For
anyone who enjoys studying the fine art of the W2, the code W with a dollar
amount is the earmarked contribution into an HSA.
One point worth
making is that although we are now in 2017, someone who has not maxed out their
HSA can still contribute additional funds into their account, allocate this
money toward 2016, and deduct the contribution on their 2016 tax return up until
the deadline of the tax return. For 2016, the maximum for individuals is $3,350
and for families is $6,750, with a $1,000 catch-up for anyone age 55 or older.
In 2017, the maximum for individuals will increase to $3,400.
While it may be
too late to make an additional HSA contribution for 2016 if you’ve already filed
your tax return, it is good information to have for the future; a future that
will last as indefinitely as the new tax laws that come down the pike, and then
the circulation of new information will begin again.
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For 2016, the standard deduction for a single individual is $6,300 and
for a married couple is $12,600. A person will benefit by itemizing once
allowable deductions exceed the applicable standard deduction. Itemized
deductions include state and local income taxes (or sales taxes), real estate
taxes, mortgage interest, charitable contributions, and unreimbursed employee
For 2016, the personal exemption is $4,050. Individuals will claim a
personal deduction for themselves, their spouse, and their dependents.
The maximum earnings subject tosocial security taxes is $127,200
for 2017, up from $118,500 for 2015 and 2016.
The standard mileage rateis $.535 per business mile as of
January 1, 2017, down from $.54 for 2016.
The maximum annual salary deferral into a 401(k) plan or a
403(b) plan is $18,000 in 2015, 2016 and 2017, up from $17.5k in 2014.
And if you'll be 50 or older by December 31st, you can contribute an extra
$6,000 into your 401(k) or 403(b) account this year.
The maximum annual contribution to your IRA is $5,500 for 2014
through 2017. And if you turn 50 by December 31st, you can contribute an
extra $1,000 that year. You have until April 15, 2017 to make your 2016
In a shocking development, the
IRS recently announced that they will be honoring the FICA tax refunds
submitted by residency programs and individual doctors. The catch is
that only FICA taxes paid prior to 4/1/05 qualify.