Four New Tax Regulations You Need to Know About

If you have not explored the changes to tax regulations effective for the 2016 tax year, it is a good idea to get up to speed before you complete your return. These changes could significantly affect your refund, or result in you owing the IRS. If these new regulations are set to affect you negatively, seek out additional credits and deductions to help.

Affordable Care Act Penalties

The penalties for not having health insurance are increasing. The maximum penalty is now $2,085, which is the premium cost for the average of Bronze Plans in the federal exchange. Avoiding this penalty would have required you to obtain health insurance coverage by the end of February 2016.

Increased Earned Income Credit

The Earned Income Tax Credit was increased. With three qualifying children, the maximum deduction you can be eligible for is $6,269, which is an increase of $27. Families that qualify with no children can only claim $506 for the credit.

Exemption Changes

The amount claimable for personal exemption increased to $4,050. If you are in the higher income brackets, this exemption is not available to you. The trade-off is that heads of household have been given a slight increase to their standard deduction.

Educator Expense Deduction

Teachers that spend their own money on classroom supplies and educational materials may be eligible for a credit. When the educational facility you work for does not reimburse you for your expenses, you may be able to claim a $250 deduction.

Final Thoughts

Before taxes are filed in 2017, additional changes could come into play. It is important to review the IRS website for new tax regulations, especially for regulations which will affect you directly. Many of these increases can be offset with credits and deductions.

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