Two important and recent changes may impact your 2016 tax-filing process.
1. Health Coverage Status
The President’s Executive Order on January 20th, 2017, directed federal agencies, including the IRS, to begin implementing plans for a full repeal of the Affordable Care Act (ACA). As of this past February, health coverage status is no longer required to be reported on the individual tax return for the 2016 tax year.
As a result, the IRS announced that it will not reject a taxpayer’s electronic or paper return that lacks health coverage information.
Unfortunately, this poses a quandary for the tax preparer who is ethically bound to calculate a penalty for anyone who has not maintained the full minimum essential coverage during the year. While the form itself can exclude coverage information, any penalty for less than minimum coverage will still apply.
2. Filing Extension for Corporations
April 15th is the new deadline for regular C corporations to file their returns (increased from March 15th). In addition, the number of months that a company could seek an extension on filing was decreased from 6 months to 5 months.
Despite this change, the extension form that was released was not updated with the new information. The IRS then issued a statement indicating that they would be granting a six-month automatic extension for returns—instead of the five-month automatic extension under the Act in 2015.
Due to the amount and timing of changes that affect this year’s tax filing, the process is proving to be very confusing and time-consuming. Moreover, in many states, including Ohio, the tax preparer is required to provide a form of identification—most often a driver’s license is used. The driver’s license number, expiration date, and issue date need to be submitted with the return for it be accepted, especially if there is a refund.
If you have questions about what you, or your tax preparer, need to submit in order for your returns to be processed for 2016, please contact me for assistance.
Susan A. Moussi, CPA, CFP®, CDFA SMD Tax & Divorce Financial Planning Consultants, Inc. Phone: 614.429.4172 email@example.com