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 others you are not going to like. Originally, there was some buzz about going from seven tax brackets to five. The new tax brackets are better than the previous brackets in my opinion. Our tax brackets for 2017 starts with 10% the income range is the same as 2016 for all filing status. The 15% tax bracket was replaced with 12% tax bracket the income range is the same as 2016 for the 15% bracket. Our next bracket and last one included in this article is 22% down from 25% in 2016. The difference starts in MFS (Married Filing Separately) the income ranges from $38,701 to $82,500 which is different from 2016 which was up to $78,075.
The Standard Deduction increased for next tax season. I would 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 every year. In 2016 the exemption credit was $4,050 per person on your return. Example: A family with husband, wife and four children would receive an exemption credit of $24,300 plus standard deduction of $9,350.
The new standard deduction for HOH will be $18,000 up from $9,350 almost a double increase. Will lose the $4,050 exemption credit.
Child and Dependent credit increased to $2,000 per child under 17, taxpayers will not receive the whole $2,000 as a refund. The refund portion will be up to $1,400 per qualifying child and nonrefundable dependent credit of $500 for non-qualifying children.
Moving Expense Deductions will not be allowed on tax returns for the 2017 tax year. Alimony is no longer deductible by the person paying alimony or included in income for the person receiving it after December 31, 2018. That sounds great for the person receiving alimony not so good if you must pay it. Casualty losses are no longer allowed unless it is from a presidentially declared disaster. Miscellaneous deductions have been removed which means union dues, tax preparer fees, uniforms, etc. will not be allowed going forward.
There are a lot of changes for the 2017 tax season. Be prepared to bring more information if you are claiming the Head of Household filing status this year.
Note: There may be some changes before the 2017 tax filing season starts.
Have a Fantastic Year and Enjoy Tax Season!