you sit down to do your tax return, you won’t find new
twists as a result of federal tinkering.
brought back some of the old favorite deductions that
were going away, and that’s basically the extent of
it. For example: Seniors over 70 1/2 will be able to
give money to charity directly out of IRAs rather than
withdrawing the money and paying taxes on it under
minimum distribution rules. Teachers will be able to get
a deduction for $250 if they spend their own money on
items for their classrooms. People will have a choice
between deducting state and local sales taxes or state
income taxes on their federal forms.
even though Congress tweaked little, you may have gone
through personal changes that make it possible to claim
deductions and credits you couldn’t in the past. Pay
particular attention if your income has decreased, you
had children of your own or adopted, paid for college,
changed jobs, started to care for a parent, or had
expensive treatment for medical problems.
prep software from TurboTax or H&R Block can help.
The IRS offers free software if your income is under
$62,000. Live help through Volunteer Income Tax
Assistance is free if your income is under $52,000.
are some notable credits and deductions:
income credit: The earned income tax credit is
especially helpful to low- and moderate-income people.
"It’s the reward for working," notes Greg
Rosica, a contributor to EY Tax Guide 2016. To qualify,
a single person without children needs adjusted gross
income below $14,820. Married couples with incomes up to
$53,267 may qualify with three or more children.
tax credit: If you had a baby last year, or have
children under 17, you can claim a $1,000 credit for
each child, although this benefit starts to phase out
for people once their incomes rise. For the full credit,
the income limit for couples is $110,000. For singles it’s
$75,000. If you adopted a child in 2015, there’s a
credit up to $13,400 on expenses.
care for kids and parents: There’s relief for families
paying for care of either children, parents or other
relatives. If you have children no older than 12, the
credit will partially cover expenses up to $6,000 in day
care depending on your income. You must be working or
looking for a job. Also, if you are caring for a parent
or relative, you may be able to claim a credit for
expenses such as adult day care. See Publication 503.
relief: Students in their first four years of college or
a technical program should consider the American
Opportunity Tax Credit for up to $2,500 in relief. If
you are taking a course for work, one that doesn’t
lead to a degree, consider the Lifetime Learning Credit
for up to $2,000 each year you pursue your education.
There are income phaseouts, however, with the full
credit available for couples with up to $160,000 in
modified adjusted gross income and $130,000 for the
lifetime credit. If your income is too high for the
credits, consider using the tuition and fees deduction.
If you have student loans, interest is deductible for
singles with incomes up to $80,000 or $160,000 for
couples. See Publication 970.
searches: If you spent at least 2 percent of your
adjusted gross income trying to get a new job, you can
deduct expenses such as travel, parking, lodging,
printing resumes and postage — even meals while away
from home. If you move for a new job, those expenses may
also be eligible.
relief: Typically, people have to pay income taxes on
any relief they are given on their mortgages in a
foreclosure or short sale, but Mark Luscombe, tax
analyst with Wolters Kluwer, notes the tax is waived
under the mortgage discharge exclusion for 2015.
business: If you have your own business in or outside
your home, you can write off some of the cost on
equipment ranging from computers to furniture in 2015,
said Rosica. You will use the bonus depreciation
provision, which means you could deduct $50,000 on
$100,000 of equipment.
expenses: If your medical costs exceeded 10 percent of
your adjusted gross income, or 7.5 percent as a senior,
you can deduct the amount over the threshold —
everything from doctors to dentists and hospitals, plus
transportation to health care.
friendly: You might be able to take the electric motor
vehicle credit for a car or home energy improvements