5 Tax Law Changes for 2017 That Could Impact Your Finances
Tax season is just around the corner, but even if you have already filed your 2016 taxes, you may be wondering what new changes to the tax law may impact you in 2017.
While the new administration promises more changes in the years to come, for 2017, here are 5 tax law changes that you should be aware of.
1.) Changes in Refund Timing When Filing for Some Credits
A 2015 law – the PATH (Protecting Americans from Tax Hikes) Act – went into effect on January 1 of this year. This provision is designed to reduce tax fraud, and it prohibits the IRS from sending out refunds or credits before February 15 for those claiming the Earned Income Tax Credit, or the Additional Child Tax Credit. Your refund amount will not be affected, but if claiming these credits, you will no longer be able to file and claim a refund before February 15th.
2.) Medical Savings Account Deductible Limits Increase for the Self-Employed
If you are a business owner, you may be contributing to a Medical Savings Account (the equivalent of a Health Savings Account for employees). In 2017, the maximum deductible for out-of-pocket expenses will increase by $50 for both individual business owners and family plans. The limit on out-of-pocket medical expenses under family coverage is also increased by $100.
3.) Changes in Medical Expense Deductions for Seniors
If you itemize medical expenses, typically your medical expenses would have to be greater than 10% of your AGI (adjusted gross income) before you could claim a deduction. For taxpayers ages 65 and older, however, the threshold was 7.5% of their AGI for 2016. Beginning in 2017, that threshold will be raised to 10% like everyone else, so your medical expenses will need to exceed 10% of your income before you can claim the deduction as an itemized expense.
4.) Slight Changes in Tax Thresholds & Standard Deductions
Most filers won’t notice many changes from last year as the tax thresholds and standard deduction amounts have been adjusted only slightly for 2017. Individual filers and heads of household can claim a standard deduction amounting to an extra $50 over 2016, and couples filing jointly will receive an extra $100. You can view the new 2017 tax brackets here.
5.) IRA Phase-Out Levels Increased
If you contribute to an IRA or a Roth IRA for retirement, the amount you can contribute is based on your income. The phase-out limit for tax-deductible contributions (or simply contributions in the case of a Roth) will increase by $1,000 for single taxpayers in 2017, and $2,000 for married couples filing jointly. This means that a few people who may not have been able to contribute to an IRA before may be able to do so now.
You can find a full summary of the 2017 tax changes on the IRS website.
Note: We are not tax attorneys, and the information above does not constitute legal or tax advice. When making any tax decisions, you should be sure to consult a qualified tax professional.