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United States Tax Changes for 2016

Filing due date extended, bans for those claiming certain credits when not eligible, Get Transcript reintroduced, various other adjustments.

Filing Due Date Extended
The due date for filing your individual tax return is April 18, 2017 (instead of April 15) because of the Emancipation Day holiday in the District of Columbia (even if you do not live in the District of Columbia).

Additional Educator Expenses Allowed
Eligible educators can deduct up to $250 of qualified expenses paid in 2016 on Line 23 of Form 1040 (rather than deducting them as an itemized deduction). Beginning in 2016, qualified expenses include certain expenses for professional development courses. See the instructions for Publication 17.

Olympic and Paralympic Medals and USOC Prize Money
If you received Olympic and Paralympic medals and United States Olympic Committee prize money, the value of the medals and the amount of the prize money may be nontaxable. See the instructions for Form 1040, Line 21.

Bans for Disregarding Child Tax Credit Rules
If you claim the Child Tax Credit (CTC) or Additional Child Tax Credit (ACTC), but you are not eligible for either credit and it is later determined your error was due to reckless or intentional disregard of the rules, you will not be allowed to claim either credit for 2 years. If it is determined that the error was due to fraud, you will not be allowed to claim either credit for 10 years. You may also have to pay penalties.

Ban on Claiming the American Opportunity Credit
If you claim the American Opportunity Credit when not eligible, you may be banned from claiming it for up to 10 years.

Health Coverage Tax Credit (HCTC)
The HCTC is a tax credit that pays a percentage of health insurance premiums for certain eligible taxpayers and their qualifying family members. The HCTC is a separate tax credit with different eligibility rules than the Premium Tax Credit. You may have received monthly advance payments of the HCTC beginning in July 2016. See the instructions for Form 8885 for information on how to report these payments.

Get Transcript Online
The IRS has reintroduced Get Transcript using a two-step authentication process to guard against fraud. The service can be used to obtain a copy of your tax transcripts and similar documents.

Individual Taxpayer Identification Number (ITIN) Renewal
If you were assigned an ITIN before Jan. 1 2013, or if you have an ITIN that you haven't included on a tax return in the last three consecutive years, you may need to renew it. See the instructions for Form W-7 for more information.

Personal Exemption Amount Increase
The personal exemption amount has increased to $4,050, but it is reduced if adjusted gross income is more than:

Itemized Deductions Limit
You may not be able to deduct all of your itemized deductions if your adjusted gross income is more than:

Standard Mileage Rates
The 2016 rate for business use of your vehicle is 54 cents a mile. The 2016 rate for use of your vehicle to get medical care or to move is 19 cents a mile.

Adoption Credit
The adoption credit and the exclusion for employer-provided adoption benefits have both increased to $13,460 per eligible child in 2016. The amount begins to phase out if you have modified adjusted gross income (MAGI) in excess of $201,920 and is completely phased out if your MAGI is $241,920 or more.

Alternative Minimum Tax (AMT) Exemption Amount
The exemption amount for the AMT has increased to $53,900 ($83,800 if married filing jointly or qualifying widow(er); $41,900 if married filing separately).

Head of Household Standard Deduction
The standard deduction for head of household filing status has increased to $9,300 in 2016. The other standard deduction amounts are unchanged.


The information on this website, and the use of this website, are both provided without warranty of any kind. Income tax rules change every year and some information may be out of date. All readers wishing to take advantage of the information offered here should consult a qualified income tax preparer. In no event will Brad Howland, Howland Tax Services, or this website be liable for any damages, including lost profits, arising out of the information offered on this website, or the usage of this website. All material on this website Copyright © 2001-2017 by Howland Tax Services, Inc. Please contact us for permission to use this material in any form. Website designed and maintained by Brad Howland.