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At this point in 2015, with the end of the year and the income tax filing deadline on the horizon, tax planning presents more of a challenge than usual.
So far, Congress has passed minimal tax legislation. However, the Senate Finance Committee at the end of July approved a two-year extension of the tax provisions that expired on Dec. 31, 2014. Early passage of an extension is hoped for but not assumed because the House of Representatives is pursuing an agenda that would make the provisions permanent.
Contacting the IRS for guidance has become more difficult because budget cuts have resulted in personnel layoffs and reduction in services. On the bright side, your chances of facing an IRS audit are greatly reduced.
But the IRS continues to send out computer-generated notices, usually from document-matching processes. Since IRS notices generated in this way are sometimes incorrect, you should consult your tax professional about the appropriate response.
Never ignore an IRS notice. It won’t go away. Deal with it promptly to reduce any penalties and interest that may accrue.
Another issue that arose in 2015 is the vote by the House to repeal the estate tax. But the bill is languishing in congressional nether land as the Senate has shown little inclination to consider it.
An additional tax concern as the 2015 tax season and the year 2016 approach relates to the health insurance requirement. You should be aware that the penalty for failure to maintain qualifying health insurance shot up this year. The penalty is the greater of $325 for each adult and $162.50 for each child (not to exceed $975) or 2 percent of household income minus the amount of your tax-filing threshold.
For 2016, the penalty jumps to the greater of $695 per adult and $347.50 per child or 2.5 percent of income above the tax-filing threshold. After 2016, the penalty will be indexed for inflation.
As in most years, tax law changes – or possible changes – make it worthwhile for you to stay informed so you can minimize taxes or at least avoid missteps that could complicate your life.
For more valuable information, please see the attached Letter.
