[IMGCAP(1)]The IRS has released a number of draft tax forms and instructions for the 2016 tax year on its website, including Form 1040 and its related schedules.
This article, which appears in two parts, highlights key changes made on the 2016 return. The first part examined the draft Form 1040 itself. Part 2 covers related draft forms and schedules.
Form 1040—Schedule A, Itemized Deductions
Line 1. Medical and dental expenses. The 2016 standard mileage rate for medically related use of an auto is 19¢ per mile.
Line 21. Unreimbursed employee expenses. The 2016 standard mileage rate for business travel is 54¢ per mile.
Line 29. Limit on itemized deductions. Itemized deductions for taxpayers with adjusted gross incomes in excess of the "applicable amount" ($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) may be reduced.
Form 1040—Schedule B, Interest and Ordinary Dividends
Line 1. Interest. Accrued interest on Series EE U.S. savings bonds issued in 1986 is taxable. Line 3. Excludable interest on Series EE or Series I U.S. savings bonds.
The exclusion for education-related savings bond interest phases out at higher income levels. For 2016, the phaseout begins at modified AGI above $77,550 ($116,300 on a joint return).
Form 1040—Schedule C, Profit Or Loss From Business
Line D. Employer ID number. For 2016, the Line D instructions provide that the sole owner of a limited liability company that is not treated as a separate entity for federal income tax purposes, and that has an Employer ID Number issued in the LLC's legal name because it is required to file employment tax returns and/or certain excise tax returns, should enter the LLC's EIN here. In prior years, the Schedule C, Line D instructions provided that such a taxpayer wasn't to enter that EIN on Line D. Instead, the owners of such an LLC were instructed to enter the EIN here issued to them in their name as a sole proprietor, if there was such an EIN.
Part II. Expenses. Line 9. Car and truck expenses. The 2016 standard mileage rate for business travel is 54¢ per mile.
Part II. Expenses. Line 13. Depreciation and section 179 expense. See entries for Form 4562, below.
Part II. Expenses. Line 27a. Other expenses. Historically, taxpayers could elect to deduct the costs of certain qualified film and television productions. Beginning in 2016, taxpayers can also elect to deduct the costs of certain qualified live theatrical productions that have their first public performance for a paying audience in 2016.
Form 4562, Depreciation and Amortization
Part I. Election to expense certain tangible property under Sec. 179. For tax years beginning in 2016, the maximum section 179 expense deduction is $500,000 ($535,000 for qualified enterprise zone property). This limit is reduced by the amount by which the cost of section 179 property placed in service during the tax year exceeds $2,010,000.
Line 14. Special depreciation allowance for qualified property. Taxpayers can elect to claim the special depreciation allowance for certain specified plants bearing fruit and nuts that are planted or grafted after Dec. 31, 2015.
Part V. Listed property. First-year luxury auto limits for vehicles first placed in service in 2016 are $3,160 for autos and $3,560 for light trucks or vans.
Form 1040—Schedule E, Supplemental Income and Loss
Standard mileage rate. The 2016 standard mileage rate for miles driven in connection with the taxpayer's rental activities is 54¢ per mile.
Form 1040—Schedule F, Profit or Loss from Farming
Part II. Farm Expenses—Cash and Accrual Method. Line 10. Car and truck expenses. The 2016 standard mileage rate for business travel is 54¢ per mile.
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