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TAX CHANGES THAT MAY AFFECT YOU

{Click a heading to see each item}

Business Miles

The following grid applies for Tax Year 2016.
Ask Bill
for more details.

2016 Rates Per Mile
Business Miles 54¢
Medical & Moving Miles 19¢
Charity Miles 14¢

Maryland Tax Updates
  • Military Retirement Income Deduction up to $5,000.00
  • Quality Teacher Incentive
  • Earned Income Credit
  • Child and Dependent Care Credit
  • Pre-paid College Trust
  • Long-term Care Insurance Credit

Income tax rates made permanent

For 2013 and beyond, the top individual income tax bracket will increase from 35% to 39.6% for taxpayers with taxable income of $400,000 or more ($450,000 or more Married Filing Jointly). Taxpayers with income below the thresholds will not see an increase in tax rates.

Capital gain rates

Beginning in 2013, the maximum capital gains tax will increase from 15% to 20% for taxpayers with taxable income of $400,000 or more ($450,000 or more Married Filing Jointly).

Additional Medicare Tax

The taxes contained in the new legislation are in addition to the 0.9% increase in Medicare tax on earned income and the 3.8% increase in Medicare tax for unearned income for taxpayers with earned/unearned income in excess of $250,000 (MFJ), $125,000 (MFS), and $200,000 (any other filing status) that were implemented as part of the Affordable Care Act of 2010.

Alternative Minimum Tax (AMT)

The AMT exemption amounts are $53,600 for individuals and head of household, $83,400 for married couples filing jointly, and $41,700 for married filing separately. The bill also allows nonrefundable personal credits to offset AMT.

Enhanced Child Credit

The $1,000 amount for each child for the Child Tax Credit has been extended through the 2017 tax year.

Enhanced Earned Income Credit (EIC)

As an extender item, the EIC credit amount was temporarily increased for taxpayers with three or more children, and the marriage penalty was reduced by increasing phaseout ranges. The new law makes the enhanced EIC permanent.

Enhanced American Opportunity Tax Credit (Hope Credit)

The American Opportunity Tax Credit (AOTC) is an enhanced version of the Hope Credit, allowing a credit of up to $2,500 for four years of post-secondary education. The new law makes the enhanced AOTC permanent.

State and local general sales taxes

The provision allowing an itemized deduction for state and local general sales taxes instead of state and local general income taxes on Schedule A, Form 1040, expired and was extended several times in the past. The new law makes the provision permanent.

Educator expenses

The new law makes the adjustment to income for qualified expenses of primary and secondary teachers permanent. The law also indexes the current expense cap of $250 for inflation beginning in 2016.

Discharge of principal residence indebtedness

The provision for allowing exclusion from income for qualified principal residence indebtedness was extended through 2016.

Itemized Deduction for Mortgage insurance premiums

The provision allowing mortgage insurance premiums to be deducted as an itemized deduction on Schedule A, Form 1040, was extended through 2016.

Tuition and fees deduction

The provision allowing an above-the-line deduction for tuition and fees paid by the taxpayer, spouse or dependents and claimed as an adjustment to income, was extended through 2016.

Phaseout of itemized deductions

For 2015, itemized deductions began to phase out for taxpayers with annual gross income of $309,900 or more if married filing jointly or qualifying widow(er); $284,050 if head of household; $258,250 if single; or $154,950 if married filing separately.

Phaseout of personal exemptions

For 2014, personal exemptions began to phase out for taxpayers with annual gross income of $309,900 or more if married filing jointly or qualifying widow(er); $284,050 if head of household; $258,250 if single; or $154,950 if married filing separately.

Energy Tax Extenders

A variety of energy tax credits were extended for energy-efficient homes, alternative fuel vehicle refueling property, and energy-efficient appliances.

For more information on how these changes may affect you, contact Bill.