Tax Changes Affect Olympians and the Rest of Us
/ Senior Vice President
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Did you win an Olympic medal and are now wondering how to report that to the U.S. government?
Maybe the answer doesn’t apply to those of us who only participated in the Rio summer games from in front of the TV, but the IRS has other new rules that likely do affect you. Each year, just as we all personally make adjustments to our accounting and tax reporting, so does the IRS. What tax changes do you need to note from the past year? Here’s a list; you’ll also find this information on the IRS website.
- April 18 is your new deadline this year! The customary April 15 deadline falls on a Saturday this year, so with the combination of the weekend and a holiday (Emancipation Day) observed April 17 in the District of Columbia — we have some extra days to file 2016 returns and pay any taxes due. (Oh, and taxpayers requesting an extension will have until Monday, Oct. 16, 2017 to file.)
- The standard mileage rates have been updated. For the use of a car, van, pickup or panel truck in 2016, rates are:
– 54 cents per mile for business miles driven in 2016. (For those planning ahead, the 2017 rate is 53.5 cents per mile.)
– 19 cents per mile driven for medical or moving purposes in 2016. (The 2017 rate is 17 cents.)
– 14 cents per mile driven in service of charitable organizations. (This rate is set by law and is unchanged.)
- For all you Olympians and Paralympians out there, good news: the value of your medals and the amount of United States Olympic Committee (USOC) prize money is not taxable… as long as your adjusted gross income is a million dollars or less!
- If you have a tax return claiming the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC), the IRS is required by law to hold your entire refund until at least Feb. 15. (And early filers may still not have actual access to their refunds until at least the week of Feb. 27 due to several factors including the time needed by banks to process direct deposits.)
- Do you need to renew your ITIN? Some Individual Taxpayer Identification Numbers (ITINs) have expired as of Jan. 1., including any ITIN with middle digits of either 78 or 79, as well as any ITIN not used on a tax return at least once in the past three years. An ITIN is used by anyone who has tax-filing or payment obligations under U.S. law, but is not eligible for a Social Security number. It can take up to 11 weeks to process a complete and accurate ITIN renewal application, so if yours has expired, act fast to avoid refund delays or loss of eligibility. (To renew yours, visit IRS.gov/ITIN, consult a Certified Acceptance Agent or Acceptance Agent or making an appointment at an IRS Taxpayer Assistance Center.)
- States are now offering ABLE accounts, designed to help people who became disabled before age 26 and their families to save for and pay for disability-related expenses. Amounts up to $14,000 can generally be contributed to an ABLE account for the year. The money you contribute to the account is not deductible, but the money you take out is tax-free if you are using it to pay for qualified disability expenses. (More information can be found on the Tax Benefit for Disability site.)
- As of August, if you have inadvertently failed to properly complete a tax-free rollover of a distribution from an IRA or workplace retirement plan to another eligible retirement program, you may qualify to use a new self-certification procedure. If eligible due to one (or more) of 11 possible circumstances, you can qualify for a waiver of the usual 60-day time limit and avoid possible early distribution taxes. (More details can be found in Revenue Procedure 2016-47 on the IRS website.)
- If you have foreign assets, don’t forget to check out the filing requirements for the Report of Foreign Bank and Financial Accounts (FBAR), which has a new deadline this year. The deadline for filing the 2016 FBAR, Form 114, with the Financial Crimes Enforcement Network (FinCEN) is April 18, 2017. The form is only available through the BSA E-Filing System website. If you miss the April 18 deadline, you automatically have until Oct. 16, 2017 to file the FBAR; no need for an extension request.
For more tax advice and help, contact me, Chris Parks and our staff at INB. As a CPA and the local Dave Ramsey-endorsed tax provider, I have over 30 years of experience in the personal finance field and can help you or your business with the process of taxes, accounting and financial management.