Tax Changes in 2017 You Need To Know About

May 18, 2017 : Mairye Bates

Whether you work at a full-time job, part-time gig, or are unemployed, Americans have unique tax considerations. What’s more, IRS guidelines are modified from year to year, creating more worry for taxpayers who want to stay abreast with current information.

Maybe you worry about the correct way to track and report your income and expenses, or perhaps you wonder about the rules for deducting retirement savings accounts. Or maybe you’re wondering about healthcare insurance topics. Here are some tax changes in 2017 that will help you stay on top of things this upcoming tax season.

For 2017, the IRS has instituted some changes that you should know about. These changes apply broadly to all American taxpayers:

Standard Tax Rates

  2017 2016
Personal Exemption $4,050* $4,050*
Standard deduction – Single, or Married Filing Separate $6,350 $6,300
Standard deduction – Head of Household $9,350 $9,300
Standard deduction – Married Filing Joint $12,700 $12,600
Earned Income Credit – Maximum Amount $6,318 $6,269
*Subject to phase out for Adjusted Gross Income starting at $261,500 ($314,000 for Married Filing Jointly)

Personal Taxes

Health Insurance

For 2017, the amount used to calculate the penalty for not maintaining minimum essential health coverage is $695 or 2.5% of household income, whichever is higher.

There are no changes to Marketplace Insurance. Remember, if you are a small business owner, you may be able to deduct your health insurance and long-term care premiums as an “above the line” deduction on your personal return, if you meet some conditions. This means that you are not limited by the 10% of AGI threshold for medical expenses. If you provide health insurance to employees, there is also a tax credit that you may be eligible for.

Retirement Contributions

TYPE 2017
Traditional* IRA or Roth** IRA $5,500
– over 50 “catch up” An additional $1,000
*May be tax deductible 
**Not tax deductible, and subject to income limits

Business-Related Expenses

The following are tax updates (effective Jan. 1, 2017) for business owners:

Mileage

Standard mileage rate drops to 53.5 cents per mile, down from 54 cents for 2016.  The rate for medical and moving mileage drops to 17 cents per mile, down from 19 cents.  The charitable mileage rate remains at 14 cents per mile.

Depreciation

Bonus depreciation has been extended through 2019.  For 2017 (and 2015 and 2016), it remains at 50%.  For 2018, it will drop to 40% and 30% in 2019.  Bonus depreciation allows you to claim that percentage of the purchase cost in the year that the asset is put into service.  This can allow you to have a lower taxable income that you might when using only regular depreciation.  You’ll continue to depreciate the rest of the cost on a normal schedule.

Section 179 depreciation options have been made permanent,  at least for now, and indexed to inflation. For 2017, the limit is $500,000. If purchases exceed $2 million, there is a dollar-for-dollar phase out, and it is eliminated above $2.5 million.

Tax Advice

A qualified tax professional can be a great help for anyone who is self-employed, or just needs an extra set of eyes on their taxes.  Navigating complicated topics like depreciation, the home office deduction, health insurance reporting, or even retirement contributions can feel daunting, but with proper planning, things will be much more manageable.

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Mairye Bates

Mairye Bates

Guest Contributor

Mairye Bates is an H&R Block Master Tax Advisor, Instructor, and a Master Virtual Instructor. She is also an IRS Enrolled Agent, and has worked for H&R Block doing taxes since 2006 in San Diego, CA.