November 2015 Updates

28 Oct

PENALTIES FOR NOT FILING INFORMATION RETURNS

Starting with the coming year, if you pay someone $600 or more to perform services for you, you are required to issue them a 1099. (This does not apply to rental property)

If you do not issue the 1099, the penalty will be $ 250 per return not filed.

This will also apply to Form W2

HOME MORTGAGE INTEREST  (THIS CHANGE IS HUGE!)

The home mortgage interest limits are now to be applied on a per-taxpayer basis and not a per-residence basis. So two or more unmarried co-owners are individually limited to a deduction for interest paid on $1 million of acquisition indebtedness and $100,00 of home equity indebtedness

RETIREMENT CONTRIBUTIONS 2016

These will be the same as 2015

THE STATE OF CALIFORNIA AND FORM 8938

Taxpayers that have a requirement to file the foreign asset statement (known as FBAR), may also be required to file Form 8938 Statement of Foreign Assets. Beginning with the new filing season, if you are required to file Form 8938 and do not, California is assessing a $10,000 penalty. 

SOLAR PANEL TAX DEDUCTIONS

Many taxpayers have been misled and believe that the full cost of their solar panels are tax deductible. The confusion stems from programs that allow homeowners to pay for these panels on their property tax bill.

Both PACE and HERO programs allow homeowners to finance solar panels through their property tax bills. Although the payments are made through property tax bills, they are NOT deductible as property tax payments.