TAX REFORM 2017
Let’s look at some of the tax changes for 2017. The changes will affect many taxpayers, some changes will make you happy and some you won’t like. Originally, there were rumors about moving from seven tax brackets to five. In my opinion, the new tax brackets are better than the old brackets. Our tax brackets for 2017 start at 10%, the income range is the same as 2016 for all filing statuses. The 15% tax bracket was replaced by the 12% tax bracket. The income range is the same as in 2016 for the 15% bracket. Our next and last group in this article is down 22% from the 25% in 2016. The difference starts at MFS (Married Filing Separately), income ranges from $38,701 to $82,500, which is different from 2016, which was up to $78,075.
The standard deduction increased for the upcoming tax season. I’d be happy except the exemption credit was phased out due to the increase in the standard deduction. This is where families will see the difference in their refunds. In prior years, the exemption credit increased by $50 each year. In 2016 the exemption credit was $4,050 per person on your return. Example: A family with a husband, wife, and four children would receive an exemption credit of $24,300 plus a standard deduction of $9,350.
The new standard deduction for HOH will be $18,000 more than $9,350, almost a two-fold increase. You will lose the $4,050 exemption credit.
The credit for children and dependents increased to $2,000 per child under 17, taxpayers will not receive the full $2,000 as a refund. The portion of the refund will be up to $1,400 per qualifying child and a $500 non-refundable dependent credit for non-qualifying children.
No deductions for moving expenses will be allowed on tax returns for tax year 2017. Child support is no longer deductible by the person paying child support or included in the recipient’s income after December 31 2018. That sounds great for the person receiving child support, not so good if they have to pay it. Casualty losses are no longer allowed except in a presidentially declared disaster. Miscellaneous deductions have been eliminated, which means union dues, tax preparer fees, uniforms, etc. will not be allowed to proceed.
There are many changes for the 2017 tax season. Be prepared to bring more information if you claim head of household filing status this year.
Note: There may be some changes before the 2017 tax filing season begins.
Have a fantastic year and enjoy tax season!