Tax News


10 biggest tax changes 

1. Tax Day is April 18, 2017. Under federal law, the tax deadline gets extended when it falls on a holiday or weekend. For those states in New England that celebrate Patriot's Day, an even later April 19 deadline will apply.

2. Tax penalties related to Obamacare are going up again. (This was news for tax changes in the year 2016) The Affordable Care Act imposed penalties for those not having qualifying health care coverage. Those penalties started at $95 per adult, or 1% of income above the filing threshold in 2014, but they rose to $285 per adult, or 2% of income above the filing limit in 2015. For 2016, penalties will rise again, hitting $695 per adult, or 2.5% of income. A family maximum will apply to the per-person amount, but the $2,085 amount will be substantially higher than the $975 in 2015, and the $285 in 2014.

3. Tax brackets are rising slightly. Most of the tax brackets that govern different classes of taxpayers are adjusted for inflation. For 2016, these bracket amounts are rising by roughly 0.4%.

4. Standard deductions are going up. Standard deductions are going up. For 2017 the standard deduction for single filers and married filing separately went from $6,300 to $6,350.  Those that file married filing jointly now have a standard deduction of $12,700 vs $12,600. For those who qualify as heads of household, the standard deduction will rise $50 to $9,350.

5. Personal exemptions are staying the same. The personal exemption that taxpayers are entitled to take on their tax returns will remain at $4,050.

6. Contribution limits on health savings accounts are going up for individuals and not for families. Health savings accounts let people with high-deductible health plans set money aside on a pretax basis to cover the costs of their health care. For 2017, the contribution limit for individual policies will increase to $3,400, but the maximum contribution for family policies will remain $6,750. A catch-up contribution of $1,000 for those 55 or older will continue to apply.

7. The Earned Income Credit is rising. The maximum allowable Earned Income Credit will go up modestly in 2017. For those with three or more qualifying children, the maximum credit will rise to $6,318, up $49. Those with two children will get a maximum $5,616, which is up $44 from 2016, while one-child families can get up to $3,400, $27 more than last year. Those without children get just a $4 bump and can claim up to $510 for 2017.

8. The exemption from AMT is higher. The alternative minimum tax has struck a growing number of taxpayers, making the exemption amount more important than ever. Single taxpayers will see their AMT exemptions go up $400 in 2017 to $54,300, while joint filers will see a $700 boost to $84,500.

9. The estate tax exemption is heading upward. The lifetime exemption amount for the gift and estate tax is tied to inflation, and it is slated to rise next year as well. The exemption amount will rise to $5.49 million, up $40,000 from 2016. The limit applies to estates of those who pass away in 2017.

10. Tax deductions for medical expenses. For 2017, in order to receive a tax deduction for medical expenses, for those over the age of 65, you will need to spend more than 10% of your Adjusted Gross Income. In the past the threshold was 7.5%. The deduction is beneficial in the tax payer(s) itemize their deductions versus taking the standard deduction. 

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