By Julie Morris, USA
Would you consider yourself “good at taxes?” If you’re like most Americans, the answer is no—and with good reason. The U.S. tax system is one of the most complicated according to the Tax Policy System (and anyone who’s filed!) for numerous reasons. Unlike some countries, there’s more to our tax system than increasing revenue. The U.S. tax system was also designed to be enforced, fair and ideally efficient. It’s also a Congressional tool to sway social policy and help key industries and groups.
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In other words, it can seem insanely complicated to the average taxpayer. It’s often a good idea to secure a quality CPA in lieu of “just” a tax preparer, especially if you’re a small business owner. CPAs are the most qualified to help you save the most, write off the most (if applicable) and can help you plan ahead so that you don’t owe a lot come April or get too much back.
CPAs are also the most qualified to keep up with changes to the tax system. Every year, the IRS can (and usually does) make changes to the rules and regulations. Here are a few to keep in mind for 2016 filings:
- The deadline changed. This one’s a biggie, especially if you’re a procrastinator who has had it drilled into your head that “tax day” is April 15. This year, it’s April 18, giving you an extra three days to file. Such a shift can happen when April 15 falls on a weekend. However, aim to have your taxes filed before the deadline. It can help relieve stress, gives you a buffer if there are any issues, and most importantly your CPA or tax preparer will be more available earlier in the year.
- Your individual taxpayer identification number may have gone AWOL. If you haven’t used a taxpayer ID in the past three years and want to or need to this year, you might need to get a new one. Many have expired. Also known as ITINS, these numbers are required by tax filers who don’t have a social security number.
- Your refund might be delayed. If you’re claiming the earned income tax credit or additional child tax credit and file early, your refund will be delayed until February 15. This is a new law requiring the IRS to “hold” these until mid-February, and also keep in mind that refunds might not show up until the last week of February due to processing. However, you can always go to the IRS’ “Where’s my Refund?” link to track it.
- The standard mileage rates have changed again. This happens most years and is important for those who claim standard mileage rates for business travel. It applies most often to contractors, small business owner, sole proprietors, and anyone who pays out of pocket for gas when travelling on business. For 2016, the price per mile is 0.54 cents per mile compared to 0.575 in 2015.
- If you’re an Olympic athlete, you’re in luck! This doesn’t apply to the vast majority of tax filers, but it’s an interesting change for your next conversation starter. As of 2016, Olympic prize money and medals is largely tax-free. Athletes must have an adjusted gross income of less than $1 million per year if single, or $500,000 if married.
With so many changes happening every year, it can be maddening to try to keep up with everything. Tax season is a source of anxiety for many people, and that can lead to bad and dangerous habits, but planning for taxes throughout the year is the best way to minimize stress and start your preparations on the right note. After all, you never know when you might make a career switch to an Olympic athlete.
This piece was written by one of our able Volunteers, Julie Morris in the U. S. A. Julie is a life and career coach professor. She likes helping others live their best lives. So please if you will like to meet with our dynamic hard working and caring woman, visit her below: