Medical Expenses:  Medical insurance premiums are tax-deductible (sometimes).  If you are self-employed, you may claim an above-the-line deduction for 100% of the premiums paid, including Medicare premiums withheld from Social Security benefits.  Others must file Schedule A and itemize their deductions to obtain a tax benefit; the aggregate of all medical expenses must exceed 10% of Adjusted Gross Income (AGI).  Seniors who reached age 65 before year-end 2016 may, this last time, still benefit from the old AGI limit of 7.5%.

Qualified Charitable Distribution (QCD):  Seniors over the age of 70½  may elect to make a direct IRA-to-charity transfer, thereby avoiding the inclusion of their Required Minimum Distribution (RMD) in taxable income, minimizing the taxability of Social Security benefits, lowering Adjusted Gross Income (AGI) thresholds for various itemized deductions, and potentially avoiding the Medicare Surtaxes.

Qualified Longevity Annuity Contract (QLAC):  Available to allow taxpayers to defer the RMD requirement past the age of 70½, although QLAC distributions must begin no later than age 85.  This fixed annuity may be funded with 25% of the taxpayer’s IRA up to $125,000 and guarantees a lifetime income stream which may be passed to spousal and other beneficiaries in the event that the plan owner dies before the contract payouts have been fully distributed.

College Access Tax Credit (CATC): A 50% credit against California state taxes for amounts donated to fund Cal Grants for low-income college students.  While there is no federal credit, taxpayers may instead claim an itemized deduction on Schedule A.  Online contributions for 2017 – the final year – may be made beginning March 2nd.

Home Office Deduction:  Under the optional safe harbor method, taxpayers may claim a deduction equal to $5/ft² (maximum $1,500) in lieu of separately detailing allowable expenses and depreciation presuming, of course, that they have an area in the home that is used regularly and exclusively for business and that such use is for the convenience of the employer.

Repair Regulations:  In an attempt to standardize and simplify taxpayer reporting, the IRS introduced new reporting requirements for business and rental property repairs.  The general rule now holds that all tangible property purchased for use in a trade or business – except inventory – must be capitalized, except costs for (a) materials and supplies under $200, (b) routine maintenance incurred to keep property in its ordinarily operating condition, (c) de minimis outlays up to $2,500 for which taxpayer makes an affirmative Safe Harbor election, and (d) maintenance and repair of buildings owned by small taxpayers with outlays of less than $10K.  If costs are expected to exceed the threshold limits, taxpayers may wish to split multiple projects over two calendar years to avoid the capitalization requirement.

Residential Energy Efficient Property Credit:  You may qualify for a non-refundable credit equal to 30% of your total cost if you install certain alternative energy equipment in your home, including solar-powered units that generate electricity or heat water.  The full credit is available through the end of 2019, then decreases annually to zero after 2021, and is available only for improvements made to your primary or second residence but not rental properties.  NOTE: Leased solar panels and new roofing costs are ineligible for the credit; and if the purchase is financed through a program that allows repayment via property taxes, the allocated portion of such taxes is non-deductible.

Shared Responsibility Payment:  All individuals and their family members are required to have medical insurance; which must be verified and reported on the taxpayer’s income tax return.  If you obtained coverage through the Health Insurance Marketplace, you will receive Form 1095-A documenting coverage maintained during each month of the prior year (2016).  If you purchased insurance directly from an insurance company, you will receive Form 1095-B; if you were insured through an employer plan, you will receive Form 1095-C.  These forms must be provided to you on or before March 2nd.  Since verification of Minimum Essential Coverage is crucial, the filing of your tax return may have to be postponed until Form 1095 is received, even if all remaining data is otherwise available.  In 2016, failure to obtain coverage may cost you a penalty equal to the greater of $695/adult ($347.50/child) or 2.5% of your yearly household income, limited to a family maximum of $2,085.  You can use this calculator to estimate your penalty.

Repayment of Premium Tax Credit: Some taxpayers may be required to refund advance credits received during 2016 to subsidize the cost of monthly premiums for insurance obtained through the Marketplace if actual income reported on the tax return exceeds the amount of income used to determine the premium credit when the insurance was purchased.  NOTE: Even taxpayers who otherwise have no filing requirement must file a tax return to reconcile the advance credit.

Medicare Surtax:  Wage-earners and self-employed taxpayers with incomes in excess of $200K ($250K if married) are subject to an additional 0.9% FICA tax.  TIP:  Payroll withholding allowances and/or quarterly estimates should be adjusted to cover the additional liability as taxpayers can otherwise be hit with underpayment penalties.

Net Investment Income (NII):  Investment income – including dividends, interest, net capital gains, annuities, royalties and net rents, as well as the gain on sale of a principal residence in excess of the allowable §121 exclusion – greater than $200K ($250K if married) is subject to a Medicare surtax of 3.8%.  Income from tax-exempt interest, VA benefits, self-employed income, IRA and pension distributions is not subject to this surtax.

Private Debt Collectors:  For the third time, Congress has mandated that the IRS use private debt collectors for delinquent tax debts. Both previous attempts – in 1996 and 2006-2009 – were scrapped as failures; nevertheless a new attempt will begin this spring.  The IRS will give each taxpayer written notice that the account is being transferred to a private collection agency which will then send a second, separate letter to the taxpayer confirming the transfer.  Private agencies may not ask for payment on a prepaid debit card. Instead, taxpayers will be given the option to submit a check payable to the US Treasury or make electronic payments directly to the IRS.

Travel Restrictions:  The Fixing America’s Surface Transportation Act of 2015 (FAST) grants the IRS the ability to notify the US State Department of taxpayers with “seriously delinquent” tax debts, defined as unpaid federal taxes over $50,000 (including penalties and interest) for which the IRS has filed a tax lien notice or issued a levy/garnishment.  The State Department may then revoke that individual’s passport.  NOTE: A debt is not considered “seriously delinquent” if an individual is making payments to the IRS under an approved payment plan or offer-in-compromise, or if the taxpayer is challenging the tax debt with the IRS through “collection due process” proceedings.

Individual Taxpayer Identification Numbers (ITINs):  ITINs are used by people who have tax-filing or payment obligations under US law but are not eligible for a Social Security Number.  Any ITIN not used on a tax return at least once in the past three years and any ITIN with middle digits of either 78 or 79 expired automatically on January 1, 2017.  To avoid return processing and refund delays, as well as denial of some tax benefits, affected taxpayers should renew their expired ITINs as soon as possible.  NOTE: Taxpayers living abroad will discover to their dismay that they may no longer submit their documents to Certifying Acceptance Agents outside of the US, but must now correspond with the IRS Service Center in Austin, TX or visit US-based Taxpayer Assistance Centers.

Crowdfunding:  Revenues generated via GoFundMe, Kickstarter and similar web-based platforms are generally considered to be taxable income unless the proceeds represent loan re-payments, capital contributions in exchange for an equity interest in a business entity, or gifts made from “detached generosity” such as those made to help support individuals in need of cancer treatment or victims of a natural disaster.  If a campaign creator is seeking to raise funds to develop or market a new product and offers a “reward” in exchange for a contribution, the creator may incur a sales tax liability in all states in which he has a physical presence.  NOTE: Some states deem that a nexus is established simply by clicking on a web-link.