5 Important Changes That May Impact Your 2016 Tax Preparation

Posted on by Capital Investment Advisors

We are officially in the midst of tax season. This year’s tax filing deadline is Tuesday, April 18. If you’re like 83% of Americans who get an average tax refund of $3,120, the idea of getting a refund may sound great, but in reality, it means you overpaid your taxes each month—money that could have been growing for you throughout the year.

So what can you do to put yourself in a better position? This year, our team developed a helpful guide with 35 tips that you can use to get ready for tax season.

2016 Tax Filing Changes

Three extra days to file and pay. With Tax Day falling on April 18, this gives you an extension beyond the traditional April 15 date.

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Delayed refunds for some taxpayers. A recent tax law change went into effect this year and requires the IRS to hold refunds on tax returns claiming the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) until at least February 15. This will cause a delay for early filers.

Update ITIN. If you have used an Individual Taxpayer Identification Number (ITIN) in the past, make sure you get it updated to avoid delays on your refund.

Mileage deductions have changed. If you use a personal vehicle for business use, the standard mileage rates for the use of a car, van, pickup or panel truck have changed. Here are the new rates:

  • 54 cents per mile for business miles driven in 2016, down from 57.5 cents in 2015. For those planning ahead, the 2017 rate, for use on a 2017 return filed next year, is 53.5 cents per mile.
  • 19 cents per mile driven for medical or moving purposes in 2016, down from 23 cents in 2015. 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.

Updated deadline for reporting foreign accounts. If you hold bank accounts overseas, you must report these in your 2016 tax filing. The time limit for filing the annual Report of Foreign Bank and Financial Accounts (FBAR) is now the same as for a federal income tax return (April 18).

To review more changes that might impact you, read updates on the IRS website.