In 2017, Some Tax Benefits Increase Slightly Due to Inflation
Adjustments, Others Are Unchanged
Inflation increases the cost of goods and
services for consumers. To ensure that American taxpayers keep
pace with the rising costs of inflation, the IRS periodically
adjusts the value of certain deductions and exemptions. With
rising deductions and exemptions, you get to protect more of
your money from becoming taxable income.
year 2017, the IRS increased the value of some different tax
benefits, while leaving some the same as last year:
- Personal and dependent
exemptions remain $4,050
- The standard deduction
rises to $6,350 for single, $9,350 for head of household,
and $12,700 for married filing jointly
- The maximum earned
income tax credit rises to $6,318
- The maximum income limit
for the EITC rises to $53,930
- The foreign earned
income deduction rises to $102,100
- Annual deductible
amounts for Health Savings Accounts increases for
individuals to $3,400 but with no change for families
- The estate and gift tax
exclusion rises to $5.49million
According to Jeff Gonzalez, a CPA and the CFO of Los
Angeles-based Electric Entertainment, "Inflation adjustments can
be a big thing. They don't come every year, but when they do,
they translate into additional money in your pocket."
New foreign financial disclosures
One of the latest tax buzzwords is "offshore
accounts," as the IRS has begun taking a closer look at the
foreign holdings of American citizens. During the transitional
tax year of 2011, only certain taxpayers had to make foreign
disclosures to the IRS. As of 2012 and beyond, all taxpayers who
meet the minimum threshold, which varies by tax-filing and
residence status, must comply.
your overseas assets don't exceed $50,000, you don't have to
worry about the new rules," says Gonzalez. "Above that amount,
check the IRS reporting limits, which may change from year to
year in the future."
U.S. residents, you have to file information about your foreign
holdings if they exceed $50,000 at year-end, if you're a single
filer. Foreign holdings exceeding $75,000 at any time during the
year must also be reported. For joint filers, the limits rise to
$150,000 at any time, and $75,000 at year-end.
U.S. citizens living abroad, the reporting limits rise
dramatically. Single filers need only report accounts exceeding
$200,000 at year-end, or $300,000 at any point during the year.
For joint filers, the limits are $400,000 at year-end, or
$600,000 at any time during the year.
above requirements for filing Form 8938 do not take the place of
the obligation to file an FBAR (Foreign Bank Account Report,
Treasury Form TD F 90-22.1) to report a financial interest in or
signature authority over a foreign financial account.
2017 continues with the following tax increases
started in 2013:
- An additional tax
bracket has been added for individuals with taxable income
greater than $400,000 and joint filers with taxable income
- Tax on long-term capital
gains is increased from 15 to 20 percent for individuals
with taxable income greater than $400,000 and joint filers
with taxable income over $450,000
- 3.8 percent Medicare
surtax on the lesser of net investment income or modified
adjusted gross income above $200,000 for individuals and
$250,000 for joint filers.
- Additional Medicare
payroll tax of 0.9 percent on earned income above $200,000
for individuals and $250,000 for joint filers.
Other changes that will affect taxes
The threshold for unreimbursed medical expenses
increased from 7.5 percent to 10 percent of Adjusted Gross
Income (AGI) for most taxpayers in 2014. There was a temporary
exemption from Jan. 1, 2013 to Dec. 31, 2016 for individuals age
65 and older and their spouses. For 2017 and 2018, all taxpayers
are subject to a decreased threshold of 7.5 percent.
Beginning Jan. 1, 2019, the threshold increases to 10 percent of
not labeled as tax increases by the IRS, the following will
increase the amount of taxes due on single filers with (AGI)
greater than $250,000 and joint filers with AGI greater than
- Personal exemption
phaseout - for every $2,500 of AGI above these income
limits, the $4,050 (2017) per-person personal exemption will
be reduced by 2%. Personal exemption will be fully phased
out for individuals with AGI greater than $384,000 and joint
filers with AGI greater than $436,300.
- Itemized deduction
phaseout - reduces itemized deductions by 3% of the AGI
above the limits (for 2017, that threshold is $313,800 for
married couples filing jointly and $287,650 for single
filers) to a maximum reduction of 80%.
information provided courtesy of
RUSHMORE TAX SERVICE INC.
Corporate Office: 1094 State Ave, Marysville, Washington 98270
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