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Tax Season 2016

We would like to thank you for choosing Bailey & Thompson for your tax and accounting solution and for your long-time support.  As the New Year dawns, we are proud to introduce our new look.  We have a refreshing new logo that is rooted in our proud 30 year history and reflects a dynamic future. While our logo may have changed, we have the same awesome team that is committed to providing you great quality service.


Tax filing season is here and once again Congress waited until very late in the year to pass tax legislation.   On Friday December 18, 2015 the President signed the “Protecting Americans from Tax Hikes Act of 2015” with dozens of temporary and permanent extensions, alternate dates and new rules.  All in all, this is very good news.  Here is our brief summary of the items effecting individuals and small business.
Permanent Changes Effective retroactively to the beginning of 2015

  • American Opportunity Credit – tax credit associated with amount paid for college tuition, books, and supplies
  • Computer and technology costs qualify as education expenses
  • $250 teacher deduction (with new inflation adjustment) (Minor changes for 2016)
  • Larger earned income tax credit
  • State and local sales tax deduction
  • Trustee to charity tax-free IRA transfers that qualify as Required Minimum Distribution
  • Employer wage credit for active duty military subsidy pay
  • 100% exclusion for small business Section 1202 stock
  • Built in gains period for S corporations now 5 years

Temporary Changes Extended through 12/31/2016

  • Principal residence mortgage debt exclusion
  • Mortgage insurance (PMI) deduction as qualified residence interest
  • Tuition deduction
  • 3 year depreciation life on race horses
  • Alternative fuel vehicle refueling facility credit
  • Fuel cell vehicle credit
  • 2 wheel electric vehicle credit

Temporary Changes Extended through 12/31/2019

  • New markets tax credit
  • Work opportunity credit

Depreciation Changes Retroactive to 1/1/2015

  • Retail/restaurant/leasehold improvements permanent 15 year depreciation life
  • Retail/restaurant/leasehold improvements permanent $250,000 Sec. 179
  • Bonus depreciation applies at 50% through 2017 (reduced thereafter, expires 2019)
  • Super Section 179 of $500,000 applies permanently (Phase out $2,000,000)
  • Section 179 applies to software permanently, and HVAC equipment starting years after 12/31/15


We also want to bring to your attention some other special items that will continue to be a focus of the IRS.


Affordable Care Act - Taxpayers are required to have qualified health insurance in 2015 or face a potential penalty nearly 300% larger than 2014’s penalty in some cases.  Proof of insurance is provided on the 1095 form series which is required to prove the insurance.  We will be asking all clients to provide information about their health insurance and months of coverage in order to avoid future problems with the IRS.  Please be prepared to provide copies of Form 1095-A, B, or C that you may receive. 


Charity - ALL deductions of any amount must have a receipt, cancelled check, or credit card statement. Any individual contribution over $250 must also have an acknowledgement letter from the charity, and the letter must be dated by the date we file your return. The letter should show the date and amount of any individual contribution over $250 and should also state that no goods or services were received in return for the contribution.


Foreign Accounts - If you have read any news in the last year, you know that the IRS is looking closely for offshore accounts. If you have an account, retirement account, or business interest with a value over $10,000 in a foreign country, or a foreign business ownership (not through a mutual fund), please let us know as some special rules will apply to you. There are substantial penalties for failure to disclose these items.


Rental Property - If you own rental property, this year the IRS has demanded substantially more information. We now need, FOR EACH PROPERTY SEPARATELY, the physical location, the type of property (single-family, duplex, etc.), and Forms 1099-K received, and a record, by property, of the number of days rented and the number of days used for personal purposes.



We would like to remind you that when you gather all your tax information, you can drop it off any time during office hours or simply mail it to us.  This can save you a lot of time especially in cases where there are not a lot of changes.  If we have any questions we will contact you. If you need to discuss your tax information, please do not hesitate to contact us.


  • Please contact the office if you wish to receive a tax organizer and have not.
  • Please answer the questions included in your organizer, verify that your personal information is correct and provide us with up-to-date contact information.
  • The engagement letter, when signed by you, authorizes us to prepare your tax return. Please include it with your organizer or sign it when you come by the office.
  • The IRS matches information returns (1099, 1098, 1095, W2,  K-1 etc.) with amounts reported on tax returns.  Please be sure to provide us all tax and information returns.
  • For extensions, please contact us as soon as you decide you require an extension. We will not prepare an extension if we do not hear from you prior to the tax return due date.
  • Filing an extension greatly reduces the amount of penalties you will owe on any unpaid tax liability. It is best to pay your estimated tax liability with your extension.
  • We do accept credit cards (Visa, MasterCard, American Express and Discover) to expedite payment processing for our clients. We expect full payment at the completion of your tax return.
  • Referrals are always welcome.
  • Our office hours during tax filing season are 8:00am to 7:00pm, Monday through Friday, and 9:00am to 5:00pm on Saturday.
  • Privacy laws require us to protect your information from your unauthorized release. Our privacy policy and record retention policy can be found on our website.



In order to allow adequate time to prepare your tax return, we need your tax return information in our office before April 10th (in the case of corporations, March 1st). This is to make sure that your return is not hurried or rushed leading up to the deadline.  For returns received on or after April 10th, an automatic six month extension will likely be necessary.    


Please rest assured that we will utilize our best resources to once again provide you with timely, complete and accurate service while keeping your tax burden to the lowest legal amount. Thank you again for your continued support.  We invite you to contact us at your earliest convenience if you need to set an appointment.   Also, should you have any questions or need directions to our office, please do not hesitate to call us.


From your tax team,


Bailey & Thompson Tax & Accounting, PA