Have you done your taxes yet? You might also be in the process of gathering the right receipts. Before you sign an IRS tax return and send it off, make sure you know about these new or improved tax breaks for this year’s tax season:
IRA rollover self-certification
Take heart if you missed the 60-day time limit for transferring distributed funds from your IRA or workplace retirement fund to another qualifying fund. Now, a new IRS self-certification process lets you receive a waiver for 11 specific reasons if you missed the 60-day deadline. They range from a death in your family to postal errors.
Higher tax thresholds
The positive effect of getting a cost-of-living increase or raise at your job can be a mixed blessing if it lifts you into a higher tax bracket. Fortunately, the IRS raised the tax thresholds for 2016, meaning you’re less likely to have to pay a greater percentage of your wages toward taxes if you earned more last year than you did in 2015.
Increased deduction for head of household
Those filing as head of household in 2016 will enjoy a $50 increase in their standard deduction, from $9,250 in 2015 to $9,300 in 2016. The standard deduction didn’t increase for other filers. You can get a larger standard deduction if you are blind, age 65 or older, or both. Depending on your circumstances, the increase can be as much as $1,550.
Increased personal exemption
In 2016, the per-person exemption rose $50 to $4,050 per person. Note that a person can only be claimed as an exemption on one tax return. So, let any of your working dependents know that they cannot take themselves as an exemption even if they earn enough money to file their own tax return.
Increased earned income credit
This income-based credit is for single, head of household, married filing jointly or widowed taxpayers with or without children. The maximum credit for 2016 is $6,269 for filers with three or more qualifying children. The amount reflects a $27 increase from 2015’s figure of $6,242.