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IRS Reminds Taxpayers Major 2015 Tax Changes

Fact Sheet 2016-8, February

IRS has issued a Fact Sheet highlighting major tax changes for 2015, including the renewal of key taxpayer-favorable benefits, a new way to save for retirement through MyRA accounts, ABLE accounts for people with disabilities, and updates on health care provisions.

Changes for 2015. The Fact Sheet covers a gamut of 2015 changes, some the result of recently enacted (or previously enacted) tax legislation, some based on IRS administrative rulings, and others based on inflation adjustments or how the days in the calendar fall.

Most taxpayers will have until Monday, April 18, to file their 2015 returns and pay any taxes due because of the effect of Emancipation Day, a holiday observed in the District of Columbia. However, residents in Maine and Massachusetts will have until

Tuesday, April 19, to file because of the Patriots’ Day holiday.
The standard mileage rates for the use of a car, van, pickup or panel truck are: 57.5¢ per mile for business miles driven in 2015 (up from 56¢ in 2014), 23¢ per mile driven for medical or moving purposes (down from 23.5¢ in 2014); and 14¢ per mile driven in service of charitable organizations.

Taxpayers, along with any of their qualifying children, must have a taxpayer identification number (TIN) — generally a Social Security number (SSN) — to claim the earned income tax credit, the child tax credit, and the American Opportunity Tax Credit. Further, to get these benefits on a 2015 return, the taxpayer must receive the number before the due date for filing a 2015 return (either April 18 or April 19, or for those who get an extension, Oct. 17).

Beginning in 2015, an IRA owner can make only one rollover from an IRA to another (or the same) IRA in any 12-month period, regardless of the number of IRAs he owns. The limit applies by aggregating all of an individual’s IRAs, including SEP and SIMPLE IRAs as well as traditional and Roth IRAs, effectively treating them as one IRA for purposes of the limit. But the IRA owner can continue to make unlimited trustee-to-trustee transfers between IRAs. Before 2015, the one-per-year limit applied on an IRA-by-IRA basis, that is, only to rollovers involving the same IRAs. There is a 2015 transition rule that ignores some 2014 distributions. An IRA distribution rolled over to another (or the same) IRA in 2014 does not prevent a 2015 distribution (within the one-year period) from being rolled over, provided the 2015 distribution is from an IRA that is different from any IRA involved in the 2014 rollover.

PATH Act extends key benefits. The Protecting Americans from Tax Hikes (PATH) Act, enacted in December 2015, extended or made permanent a number of tax benefits that had expired at the end of 2014 (i.e., so-called extender provisions), including:

  • The deduction for state and local sales taxes claimed by taxpayers who itemize their deductions on Schedule A and choose to deduct sales taxes instead of state and local income taxes;
  • The nonbusiness energy property credit claimed on Form 5695 by homeowners who install energy-efficient windows, doors, furnaces, insulation and other qualifying home improvements;
  • The educator expense deduction claimed on Form 1040 Line 23 or Form 1040A Line 16 by teachers and other eligible elementary and secondary educators who pay for various classroom expenses;
  • The tuition and fees deduction claimed on Form 8917 by eligible parents and college students; and
  • Qualified charitable distributions, reported on Form 1040 Lines 15a and 15b, by IRA owners age 70-1/2 or older, who transfer tax-free up to $100,000 to qualified charities during 2015.

ABLE accounts. States can now offer specially designed, tax-favored ABLE (Achieving a Better Life Experience) accounts to people with disabilities who became disabled before age 26. These accounts were authorized by the Achieving a Better Life Experience Act of 2014 (ABLE Act), which was part of the Tax Increase Prevention Act of 2014 (TIPA, PL 113-295, 12/19/2014). Recognizing the special financial burdens faced by families raising children with disabilities, ABLE accounts are designed to enable people with disabilities and their families to save and pay for disability-related expenses. Contributions totaling up to the annual gift tax exclusion amount ($14,000 in 2015) can generally be made to an ABLE account each year. Though contributions are not deductible, distributions are tax-free if used to pay qualified disability expenses.

New retirement account available. Eligible taxpayers can now take advantage of a new starter retirement account available free from the Treasury Department through the MyRA program. Taxpayers can choose to fund a retirement account through payroll deductions, electronic transfers from a savings or checking account, or by choosing direct deposit for their federal income tax refund.

Health care provisions. Many taxpayers will receive new year-end forms (including Form 1095-B and Form 1095-C) providing them with information about health coverage they had or were offered. While the information on these forms may assist in preparing a return, they are not required. Like last year, taxpayers can prepare and file their returns using other information about their health insurance.

The individual shared responsibility payment has increased from last year and will apply to taxpayers who did not have qualifying coverage or an exemption for each month during 2015.

To determine whether an exemption is available or the payment applies, check out the special interactive tool available on IRS.gov Like last year, most taxpayers will simply need to check a box on their tax return to indicate they had health coverage for all of 2015.

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