The following is a list of changes to the tax law for tax year 2017 that will impact individual taxpayers:

 New Tax Laws for Tax Year 2017
  • For 2017, capital gains tax rates are 15% for taxpayers in the 25% or higher income tax brackets and 0% for taxpayers in the 10% or 15% tax brackets. There is an additional 3.8% "net investment tax" on investment income for taxpayers whose AGI exceeds $200,000 ($250,000 joint filers). There is an additional 5% capital gains tax for individuals with taxable income greater than $418,400 ($470,700 joint filers).
  • The “kiddie tax” now applies to all children 18 or under in 2017 and to dependent “student” children up to the age of 24. Dependent children under age 19 in 2017 and dependent "student" children under 24 that have investment income greater than $2,100 may be subject to a tax based on their parent's income.
  • All cash contributions made in 2017 to any qualified charity must be supported by a dated bank record or a dated receipt. Also, no deduction is allowed for most contributions of clothing and household items made in 2017 unless the donated property is in good used condition or better.
  • The annual gift tax exclusion is $14,000 for gifts made in 2017. Any person can give to another individual up to $14,000 with no tax consequences to either party.
 Individual & Business Tax Information, Deductions and Credits
  • The maximum section 179 deduction for 2017 is $500,000. Businesses are allowed to write off 100% of new equipment purchased in 2017 up to a maximum deduction of $500,000. Section 179 depreciation applies to purchases of both new and used equipment.
  • Bonus depreciation remains at 50% in 2017 but will decrease to 40% in 2018 and 30% in 2019. Bonus depreciation is only applicable to purchases of new equipment, not used. Bonus depreciation is schedule to be eliminated in 2020.
  • The “Manufacturers Deduction” is available again this year for eligible manufacturers, construction contractors, engineers, architects, software developers, film producers, energy producers, farmers and agricultural processors. It is available to businesses and self-employed individuals in the amount of 9% of Qualified Domestic Production Activities Income. If you think this might apply to you, please mention it when you are meeting with us.
  • The standard mileage rate decreased to 53.5 cents per mile for all business miles driven in 2017. The standard mileage rate for charitable miles remains at .14 cents per mile in 2017. The mileage rate for medical and moving decreased to .17 centes per mile in 2017.
  • License plate fees can be deducted in addition to the mileage deduction.
  • If you are unable to file a timely return this year you can file Form 4868 by April 15 to receive an additional 6 month extension fo time to file your return. This is the only extension available to individuals this year. Remember, this is only an extension to file your return, it is not an extension to pay any tax due.
  • Even though the Alternative Minimum Tax exemption amount has increased, more taxpayers will be subject to this controversial tax than ever before. We can discuss if and how this may affect you when we meet.
 2017 Limits, Increases, and Phase Outs
  • The Standard Deduction Increased for 2017
    • Head of Household - $9,350
    • Married Filing Joint/Qualifying Widow(er) - $12,700
    • Married Filing Separately - $6,350
    • Single - $6,350
  • The amount you can deduct for each exemption is $4,050 in 2017.
  • Income Limits Increased for the American Opportunity and Lifetime Learning Credits
    • For 2017, the amount of your American Opportunity credit is phased out (gradually reduced) if your modified gross income is between $80,000 and $90,000 ($160,000 and $180,000 if you file a joint return). The maximum credit available for 2013 is $2,500.
    • The amount of your Lifetime Learning credit is phased out (gradually reduced) if your modified gross income is between $56,000 and $66,000 ($112,000 and $132,000 if you file a joint return). The maximum credit available for 2017 is $2,000.
    • Both the American Opportunity Credit & the Lifetime Learning Credit are available to eligible post-secondary education students to help offset the cost of tuition.
 Retirement Plan & Health Savings Account Information
  • Contribution Limits Increased for Retirement Plans
    • Traditional IRA and Roth IRA - $5,500 ($6,500 if 50 or over)
    • 401(k) - $18,500 ($24,000 if 50 or over)
    • SEP - $54,000 or 25% of participants compensation generally limited to $270,000
    • SIMPLE - Lesser of $12,500 ($15,500 if 50 or over) or total compensation
  • You can deduct contributions made to a traditional IRA on your individual tax return. However, if you or your spouse is covered by an employer retirement plan, the amount of your deduction may be limited to the following:
    • If neither you or your spouse is covered by an employer plan, you can take a deduction for total contributions to one or more of your Traditional IRA's of up to the lesser of $5,500 ($6,500 if over 50) or your total compensation.
    • If you are not covered by a retirement plan but your spouse is, then you are eligible for the full deduction if your Modified AGI is less than $186,000, a partial deduction if your Modified AGI is more than $186,000 but less than $196,000, and no deduction if your Modified AGI is more than $196,000.
    • If you and your spouse is covered by an employer plan, then you can take the full deduction if your Modified AGI is less than $62,000 ($99,000 Married Filing Joint), a partial deduction if your Modified AGI is more that $62,000 but less than $72,000 ($99,000 and $119,000 for Married Filing Joint), and no deduction if your Modified AGI is more than $72,000 ($119,000 Married Filing Joint).
    • If you are filing Married Filing Separate, then you are only elegible for a partial deduction if your Modified AGI is less that $10,000.
  • Individuals have until April 15th of the following year to make a deductible contribution to an IRA for the current year.
  • There is no deduction available for contributions to a Roth IRA. However, all earnings can be withdrawn tax-free after you reach retirement age.
  • Generally, you can contribute to a Roth IRA if your Modified AGI is less than $118,000 ($186,000 for Married Filing Joint) in 2017.
  • A new tax law allows for the conversion of Traditional IRA's to Roth IRA's for individuals without any Modified AGI limitations starting in tax year 2010 and beyond.
  • Retirement Savings Contribution Credit
    • You may be able to take a tax credit if you make eligible contributions to a qualified retirement plan or IRA. The maximum credit available is $1,000 ($2,000 for Married Filing Joint). The credit is subject to phase-out at certain Modified AGI levels.
  • For 2017, the maximum Health Savings Account (HSA) deduction increased to $3,400 ($6,750 for family coverage). The maximum additional deduction for individuals age 55 or older remains at $1,000. For HSA purposes, the minimum annual deductible of a high deductible health plan increased to $1,300 ($2,600 for family coverage) and the maximum annual deductible and other out-of-pocket expenses limit increased to $6,550 ($13,100 for family coverage).