(Editor’s note: Today we hear from Derek Davis, CEO of Shared Economy CPA, which focuses on the tax and financial needs of individuals working in the sharing economy. Tax issues are complicated, so please be sure to consult a tax advisor about how the information below applies to you.)
Tax laws change every year and can significantly change what you end up paying, so it’s important to stay up-to-date. Below are a few key changes that may impact your 2015 taxes:
- Protecting Americans from Tax Hikes (PATH) Act: In December of 2015, Congress passed The “Protecting Americans from Tax Hikes” (PATH) Act. This passage made a number of temporary tax provisions permanent, taking the worry out of each year if Congress would take action to extend certain relief policies. Included in the extender package is the allowance of State sales tax deductions for states with no income tax. Additionally, PATH extends the deductions allowed under Section 179 of the IRS code, which enables businesses to deduct the full purchase price of up to $500,000 of qualifying equipment and/or software purchased or financed during the tax year. To see if qualify and how much money you can save, try the Section 179 calculator.
- Taxes Due April 18th, 2016: Tax day is April 18th this year. Since the Washington DC holiday of Emancipation Day is on Friday April 15th, Federal law says that the tax deadline gets extended when it falls on a holiday or weekend, so the tax deadline for most tax payers will be Monday April 18th, 2016.
- Standard Mileage Deduction: You may have noticed that gas prices have been steadily decreasing. Congress has noticed this trend also, so for the first time, the IRS has announced that the 2016 standard mileage rate for the business use of your vehicle is 54 cents per mile, down from 57.5 cents in 2015. Be sure to track your mileage, gas, maintenance, and repair costs, to capture the highest possible deduction for your business.
- Affordable Care Act Penalties: Tax penalties related to the Affordable Care Act (Obamacare) are going up. The ACA has imposed penalties for not having qualifying healthcare coverage. The penalties originally started out at $95 per adult, or 1% of income over the filing threshold. In 2015 it rose to $285 per adult, or 2% of the income over the threshold. For 2016, it will be a whopping $695 per adult, or 2.5% of income.
- Expenses: Keeping good records and staying atop of your Sharing Economy business is the key to reducing the amount of taxes that you’ll end up owing. Make sure that you understand everything that you can deduct. For example, purchasing insurance benefits through Peers can be tax deductible!
Contact the Shared Economy CPA if you have further 2015 accounting and tax questions.