What’s New on IRS Form 1040 for 2016?

Learn about new credit, deduction, and exemption amounts and some new rules for your 2016 tax filing.

Tax laws are always changing, so tax forms must change as well. Here’s what’s new on IRS Form 1040 for the 2016 tax year.

Filing Your Return

The deadline to file your 2016 tax return is April 18, 2017, rather than the usual April 15 deadline. This is because April 15 and 16 fall on a weekend and April 17 is Emancipation Day in the District of Columbia. If that’s not enough time to file, you can get an automatic six-month extension by either filing IRS Form 4868,  Application for Automatic Extension of Time to File U.S. Individual Income Tax Return,  or by making an electronic payment.

If you file a paper return, the most reliable way to deliver it the IRS is with a private delivery service or by certified mail. The IRS has added eight new private delivery services you can you use. You can find a list in the  Form 1040 Instructions. If you file your self-prepared return electronically, as most taxpayers do, you may no longer use an IRS-generated PIN to verify your signature. Instead, you must use the adjusted gross income listed on your 2015 return, or prior year self-selected PIN.

Line 21. Other Income

Starting in 2016, if you receive Olympic or Paralympic medals and United States Olympic Committee prize money, the value of the medals and the amount of the prize money is not taxable as long as your gross income is less than $1 million. List the amount of such prize money line 21, then subtract it by including it on line 36 along with any other write-in adjustments.

Line 23. Educator Expenses

Teachers of kindergarten through grade 12 are eligible to deduct up to $250 in educator expenses. Starting in 2016, these expenses can include the costs of professional development courses that relate to the curriculum or students that are taught.

Line 26. Moving Expenses

Moving expenses can be deductible if you move for your existing job or to start a new job or business. You may deduct your mileage for such moves. To do so, you may deduct your actual expenses for gas and other expenses, or use the standard mileage rate. The 2016 standard mileage rate for moving expenses is 19 ¢ per mile.

Line 32. IRA Deduction

If neither you nor your spouse were covered by a retirement plan at work, you may make a tax deductible contribution to an IRA up to an annual limit. For 2016, the limit is $5,500, with an additional $1,000 if you or your spouse are over 50 years old.

If you have a retirement plan at work, the IRA is phased out if your income exceeds certain levels. For 2016, the phase-out begins for single taxpayers with modified adjusted gross incomes over $71,000; $118,000 if you are married and filing jointly or a qualifying widow(er).

If your spouse was covered by a retirement plan, but you were not, the IRA deduction phase-out begins if your 2016 MAGI is more than $194,000.

Line 40. Itemized Deductions or Standard Deduction

For 2016, the standard deduction is $6,300 for single filers and for married taxpayers filing separately, $12,600 for joint filers and qualifying widow(er)s, and $9,300 for heads of household.

Line 42. Exemptions

The amount of each exemption for 2016 is $4,050. Exemptions are reduced for taxpayers whose adjusted gross income exceeds the following amounts:

  • $311,300 for joint filers or a surviving spouse
  • $285,350 for a head of household
  • $259,400 for a single individual who isn't a surviving spouse, and
  • $155,650 for marrieds filing separately.

Line 45. Alternative Minimum Tax

The alternative minimum tax exemption amount for 2016 is $53,900 for single taxpayers, $83,800 if married filing jointly or a qualifying widow(er), and $41,900 if married filing separately.

Line 54. Other Credits

For 2016, the maximum adoption credit is $13,460 per eligible child for both non-special needs adoptions and special needs adoptions. The amount begins to phase out if modified adjusted gross income (MAGI) exceeds $201,920 and is completely phased out if MAGI is $241,920 or more.

Line 57. Self-Employment Tax

The maximum amount of self-employment income subject to FICA tax is $118,500; there is no ceiling on Medicare taxes.

Line 61. Health Care: Individual Responsibility

If you and your dependents did not have health care coverage during 2016 and did not qualify for a coverage exemption, you’ll have to make a "shared responsibility payment" along with your return. For 2016, the payment is the greater of $695 per family member (up to a ceiling of $2,085) or 2.5% of the amount by which the your household income exceeds the filing threshold (capped at the national average of the bronze plan premium).

Line 66. Earned Income Tax Credit (EITC)

The amount of income you may earn and receive for the EITC has increased for 2016. The amount of the credit is based on how many dependent children you have. The maximum credit is also higher.

Lines 74-77. Refund

If you received the Earned Income Tax Credit or additional child tax credit during 2016, the IRS will not issue your tax refund until after February 15, 2017. This rule applies to your entire refund, not just the portion based on those credits. The reason for the delay is to give the IRS time to discover fraudulent claims. Even if you don’t get these credits your refund may be delayed due to increased security screenings the IRS has put in place to combat identity theft and tax refund fraud. However, the IRS says that most refunds will still be issued within the normal time frame: 21 days or less, after being accepted for processing by the IRS.

Line 78. Amount You Owe

The IRS has implemented a new cash payment option. This is designed to enable people who don’t have a bank account or credit card to make their tax payments. To do this, you must sign up with OfficialPayments.com and have your payment information verified. You can then can go to a participating 7-Eleven store and make a cash payment to the IRS. There is a $1,000 payment limit per day and a $3.99 fee per payment. See the IRS  Pay with Cash at a Retail Partner  webpage for more details.

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