2017 Tax Provisions for Individuals: A Review
Many of the tax laws from 2016 have carried over for 2017. Aside from various cost of living increases the taxes will remain the same.
Personal Exemptions & Standard Deductions: The personal and dependent exemption for tax year 2017 is $4,050.The standard deduction for married couples filing a joint return in 2017 is $12,700. For singles and married individuals filing separately, it is $6,350, and for heads of household the deduction is $9,350.
Income Tax Rate: In 2017 the top tax rate of 39.6 percent affects individuals whose income exceeds $415,051 ($466,951 for married taxpayers filing a joint return). Marginal tax rates for 2016--10, 15, 25, 28, 33 and 35 percent--remain the same as in prior years.
Long Term Capital Gains: In 2016 taxpayers in the lower tax brackets (10 and 15 percent) pay zero percent on long-term capital gains. For taxpayers in the middle four tax brackets the rate is 15 percent and for taxpayers whose income is at or above $415,050 ($466,950 married filing jointly), the rate for both capital gains and dividends is capped at 20 percent. (Same rule as past year)
Child and Dependent Care Credit: The child and dependent care tax credit was permanently extended for taxable years starting in 2013. If you pay someone to take care of your dependent (defined as being under the age of 13 at the end of the tax) in order to work or look for work, you may qualify for a credit of up to $1,050 of eligible expenses for two dependents. (Same rule as past year)
Child Tax Credit : For tax year 2017, the child tax credit is $1,000. A portion of the credit may be refundable, which means that you can claim the amount you are owed, even if you have no tax liability for the year. The credit is phased out for those with higher incomes. (Same rule as past year)
Earned Income Tax Credit (EITC): The credit varies by family size, filing status, with the maximum credit going to joint filers with three or more qualifying children. For tax year 2017, the maximum earned income tax credit (EITC) for low income workers and working families increased to $6,318. The maximum income limit for the EITC increased to $53,930 for married filing jointly.
American Opportunity Tax Credit: For 2017, the maximum American Opportunity Tax Credit that can be used to offset certain higher education expenses is $2,500 per student, although it is phased out beginning at $80,000 to $160,000. (Same rule as past year)
Lifetime Learning Credit : A credit of up to $2,000 is available for an unlimited number of years for certain costs of graduate courses or courses to acquire or improve your job skills. For 2016, the modified adjusted gross income threshold at which the lifetime learning credit begins to phase out is $108,000 for joint filers and $54,000 for singles and heads of household. (Same rule as past year)
Student Loan Interest: In 2017 you can deduct up to $2,500 in student-loan interest as long as your modified adjusted gross income is less than $65,000 (single) or $130,000 (married filing jointly). The deduction is phased out at higher income levels.
Retirement Contribution Limits: For 2017, Roth and Traditional IRA contribution limit has been kept at $5,500 ($6,500 for over age 50). The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government's Thrift Savings Plan is $18,000 (same as 2015). For persons age 50 or older in 2017, ($6,000 catch-up contribution). Contribution limits for SIMPLE plans remain at $12,500 (and $3,000 catch up, same as 2016).
2017 Recap: Tax Provisions for Businesses
Whether you file as a corporation or sole proprietor here's what business owners need to know about tax changes for 2016.
Standard Mileage Rates: The standard mileage rates in 2016 are as follows: 53.5 cents per business mile driven, 17 cents for medical or moving purposes, and 14 cents per mile driven in service of charitable organizations.
Section 179 Expensing and Depreciation: The Section 179 expense deduction was made permanent at $500,000 by the Protecting Americans from Tax Hikes Act of 2015 (PATH). The 50 percent bonus depreciation has been extended through 2019. Businesses are able to depreciate 50 percent of the cost of equipment acquired and placed in service during 2015, 2016 and 2017.
Extension Deadlines for Tax Year 2017: S corps & Partnerships March 15, 2018. Individuals and C Corps April 17, 2018. Non-Profits May 15, 2018. Extensions: (S Corp /Partnerships: September 17) (Individual 1040/Corps: October 15)