The U.S. Tax Code is constantly changing and 2017 brings 5 worthless tax changes that you may want to remember when filing your taxes. Keep in mind these tax changes affect the tax preparation you will do in 2018 for the calendar year 2017.
Here are the five tax changes:
1. Tax tables have been adjusted for inflation
That is the good news, but since inflation has been low, the adjustment is minimal. All thing being equal, you will pay slightly less tax than in 2016. The 2017 rates are below:
2. Standard deductions have increased
If you don’t itemize your deductions, then you take the standard deduction. This will rise modestly in 2017 for everyone. Single and head of household filers will receive a $50 increase and married couples will receive a $100 increase. This tax change is insignificant at best.
3. Lowered standard mileage rate
The standard mileage rate, for business related expenses, has been lowered half a penny to 53.5 cents per mile. The rate for medical and moving mileage has been lowered two cents to 17 cents per mile. Previously, the business standard mileage rate was 54 cents per mile, and the rate for medical and moving expenses was 19 cents per mile. This change effectively means less reimbursement for allowable mileage expenses.
4. Deductible medical expenses 10% threshold
For 2017, everyone is subject to the 10% medical expense threshold. This means that your medical expenses need to be greater than 10% of your income before it can be a usable deduction on your tax return. Previously, if you were 65 or older, the deductibility threshold was 7.5%. Keep in mind, if you don’t itemize your deductions, then you can’t deduct medical expenses.
5. Accelerated due dates
Due dates to file many forms and returns have changed, which affect 2017. Employer provided W2’s, W3’s and 1099’s must be filed by January 31 of the following year. Partnership and S corporation tax returns are due by March 15 (previously April 15). C corporation tax returns are due by April 15 (previously March 15).
Tax Hike for Illinois residents
Effective July 1, 2017, Illinois lawmakers voted to permanently increase the personal income tax rate to 4.95% from the previous 3.75%. The corporate tax rate increases to 7% from the previous 5.25%. It’s more important than ever to ensure that you are claiming all deductions, credits, and subtractions so that you don’t pay more in tax than you legally owe.
What can you do to minimize your taxes? Work with a tax preparer who is knowledgeable and credentialed, like a CPA or an enrolled agent. Have a conversation with him or her, to ensure that you are claiming all the allowable deductions and credits that are afforded to you. Tax planning needs to be done typically before the calendar year ends, so don’t wait until tax time! Click here for a handy printable pdf “2017 Tax Guide“.
Isn’t it time you had an experienced tax professional on your side? I am an Illinois Registered Certified Public Accountant, and a Certified Tax Resolution Specialist with over 20 years of experience, dedicated to providing outstanding tax and accounting services to individuals and small businesses in the Chicagoland area. Contact me to find out how I can help you with your taxes.
The information presented in the above article is general in nature, and not warranted or guaranteed. Your situation is specific to you alone, so be sure to speak with a Certified Public Accountant or a trusted tax advisor. You are welcome to contact me if you would like a free consultation to discuss your tax situation.
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