Welcome, 2017! As the New Year rolls around, you can bet your bottom dollar that there will be changes to current tax laws… and 2017 is no different. From health savings accounts to tax rate schedules and standard deductions, American Tax Company has compiled a checklist of tax changes to help you plan the year ahead.
For 2017, more than 50 tax provisions are affected by inflation adjustments, including personal exemptions, AMT exemption amounts, and foreign earned income exclusion. While the tax rate structure, which ranges from 10 to 39.6 percent, remains the same as in 2016, tax-bracket thresholds increase for each filing status. Standard deductions and the personal exemption have also been adjusted upward to reflect inflation.
Penalty for not Maintaining Minimum Essential Health Coverage
For calendar year 2017, the dollar amount used to determine the penalty for not maintaining minimum essential health coverage is $695.
Earned Income Tax Credit
For tax year 2017, the maximum earned income tax credit (EITC) for low and moderate income workers and working families rises to $6,318, up from $6,269 in 2016. The credit varies by family size, filing status, and other factors, with the maximum credit going to join fliers with three or more qualifying children.
Child Tax Credit
For the tax year 2017, the child tax credit is $1,000 per child. The enhanced child tax credit was made permanent this year by the Protecting Americans from Tax Hikes Act of 2016 (PATH). In addition to a $1,000 credit per qualifying child, an additional refundable credit equal to 15 percent of earned income in excess of $3,000 has been available since 2009.
American Opportunity Tax Credit and Lifetime Learning Credits
The American Opportunity Tax Credit (formerly the Hope Scholarship Credit) was extended to the end of 2017 by ATRA but was made permanent by PATH in 2016. The maximum credit is $2,500 per student. The Lifetime Learning Credit remains at $2,000 per return; however, the adjusted gross income amount used by joint filers to determine the reduction in the Lifetime Learning Credit is $112,000, up from $111,000 for tax year 2016.
For more information on the above listed items or any other tax law changes, please contact our office to speak with one of our friendly and knowledgeable Tax Professionals.