5 Important Tax Facts You Should Know for 2016

It’s a new year. Therefore, there are new changes to the tax code. Some of those changes are minor and won’t impact you at all. However, other changes could affect you dramatically.

Here are 5 important tax facts you should know for 2016.

1. Penalty for no Health Insurance

Now that the Patient Protection and Affordable Care Act (PPACA) is the law of the land, you’re required to have health insurance. If you don’t, you’ll face a penalty that’s really just an additional tax.

The costs are complicated. If you’ve decided not to get health insurance, it’s best if you buy tax software that will calculate the amount of the penalty that you owe. While you’re at it, be sure to also get software that will help you file DC taxes or taxes for the state that you live in.

Keep in mind, though, the PPACA penalty is not insignificant. You’ll likely owe a lot more in taxes than you would have otherwise. Consider getting health insurance for next year.

2. Paperwork for Employers

It’s not just individuals who are affected by the PPACA. Employers are affected as well.

Form 1095-B provides information about minimum essential coverage to an individual and is mandatory for employers. Form 1095-C is mandatory for large employers (companies with at least 50 employees) and smaller employers that are members of a “controlled group” that include at least 50 employees.

3. New Filing Date

Good news: Uncle Sam is giving you a few extra days to determine your estate taxes and file your tax return this year. As you probably know, you normally have to file by April 15. However, that’s an official holiday in the District of Columbia (Emancipation Day). This year, you’ll have to file by April 18. If you live in Maine or Massachusetts, you have an additional day thanks to Patriots Day.

4. Filing Deadlines for Businesses and Extenders

Some businesses will see filing deadline changes in 2016. For example, if you have an S corporation, you have until the 15th day of third month after the end of the tax year to file your business taxes. That means you have until March 15.

On the other hand, if you have a C corporation, you have until the fourth month following the tax year. That means you have until April 15.

Also, if you have to file paperwork related to partnership income, you now have a six-month extension. If you have to file paperwork related to estate and trust affairs, you have a five-and-a-half month extension. If you have to file paperwork related to employee benefit plans, you have a three-and-a-half month extension.

5. Higher Taxes

Unfortunately, you might have to pay higher taxes as well. Since the American Taxpayer Relief Act of 2012, there’s been a new 39.6 percent tax bracket. If you’re making a few hundred thousand dollars per year, it’s likely that you’ll have to fork over almost 40 percent of your income in taxes.

Almost every year there are changes to the tax code. Be sure to keep up with the changes that affect how you file and pay taxes.