What’s New for 2017

STANDARD MILEAGE RATES FOR 2017 business mileage 53.5 cents, medical & moving 17 cents & charity 14 cents. The 2018 mileage rates will be 54.5 cents for business, medical & moving 18 cents and charity 18 cents.

RULES FOR CHARITY DONATIONS – No change….For all donations of cash, you must have a cancelled check, a receipt or acknowledgement and for amounts over $250 you MUST have BOTH. For non-cash donations you must have a receipt and all donated clothing and household items must be in good condition…take a picture to show condition!

RETIREMENT SAVINGS (IRA) – No change…For 2017 and 2018 you can contribute up to $5,500 & if you are over 50…$6,500. This deduction is limited to the lesser of your contribution or your earned income. Contributions MUST be made before April 17th.

SALES TAX DEDUCTION – The tax deduction for state and local sales taxes was extended for 2017, including sales tax paid on a new motor vehicle. You can deduct the sales tax or income taxes paid whichever is higher.

ESTATE & GIFT TAX – The estate tax exemption increase to $5,490,000 for 2017 and $5,600,000 for 2018…after the exemption amounts estates are taxed at 40%. The gift tax annual exclusion remains at $14,000 for 2017 and increases to $15,000 for 2018. Above these amounts there is no additional tax…but the gift must be reported to the IRS. If the gift is  made for someone else’s educational cost (for tuition only and made directly to a qualified education institution) the gift is non-taxable.

HEALTH INSURANCE PENALTY – Part of the Affordable Care Act mandates that all Americans have health coverage or pay a penalty. In 2017 the penalty for not having health coverage will be 2.5% of your total household income, or $695 per adult and $347 per child in the household with a family ceiling of $2,085.

PHASEOUTS ARE BACK – AGI phase-outs are back for both personal exemptions and itemized deductions.

ENERGY CREDITS – You may be able to claim a 30% tax credit (with  no upper limit) for the purchase of qualified solar energy, small wind turbine systems and fuel cells for your home. The unused portion of the credit may be carried over to future years.

TAX CREDIT FOR FIRST FOUR YEARS OF COLLEGE EXTENDED THROUGH 2017 – Eligible tax payers may qualify for the maximum annual credit of $2,500 per student. Also 40% of the credit ($1,000) is refundable which means that you get it even if you owe no tax. The credit is 100% of the first $2000 and 25% of the next $2000. Qualified expenses include tuition and expenses for course related materials (books, supplies and equipment needed for the course of study whether or not purchased from the educational institution). Subject to AGI limitations ($80,000 for single tax-payers and $160,000 for joint filers). To claim this credit you MUST have a form 1098-T from the educational institution.

SOCIAL SECURITY TAX – Social security taxable wage limit increased to $127,200 for 2017.  The social security tax rate for 2017 was 6.2% for employees and employers. Medicare tax rate for both employers and employees was 1.45%…with no maximum. For 2017 retirees under full retirement age can earn up to $16,920  without losing benefits and increases to $17,040 in 2018.

DUE DATE OF TAX RETURNS – The due date for 2017 tax returns will be Monday, April 16, 2018.