Although changes for the 2016 tax year were mostly minor, there are a few deduction adjustments and other tweaks that will likely interest taxpayers as they prepare to file their yearly returns.
Taxpayers who can claim a head-of-household deduction will see a slight change, with the standard deduction amount for 2016 increased to $9,300, up $50 from the 2015 tax year.
In addition, the personal exemption inched up $50 to $4,050 for 2016. However, taxpayers in higher tax brackets may not be able to take advantage of this exemption. The IRS said the exemption will be phased out, starting with individual taxpayers whose gross adjusted income is $259,400 and married couples filing jointly with a combined gross adjusted income of $311,300. This exemption will be phased out entirely for married couples filing jointly with a combined income of $433,800 and for single filers at $381,900.
According to an IRS release, the tax year 2016 maximum Earned Income Credit amount is $6,269 for taxpayers filing jointly who have three or more qualifying children, up from a total of $6,242 for tax year 2015.
For the most part, the other most common standard deductions remained unchanged. Specifically, the IRS said the standard deduction for single taxpayers and those who are married but filing separate returns stayed at $6,300 for the 2016 tax year, and the standard deduction for married couples filing a joint return remains $12,600.
Other changes to watch out for when preparing a 2016 tax return include a $5 increase, to $255 from $250, to the qualified parking fringe benefit monthly limitation, a $1,000 revision, up to $111,000 from $110,000 to the adjusted gross income amount used by joint filers to determine the reduction in the Lifetime Learning Credit, and a small increase, to $101,300 from $100,800, to the foreign earned income exclusion.
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