| Dale K. Cline, CPA, PLLC
CERTIFIED PUBLIC ACCOUNTANT
P.O. Box 3966
Suite 101, 1333 2nd St. N.E.
Hickory, NC 28603-3966
TAX INFORMATION FOR INDIVIDUALS
Healthcare reform, budget cuts, tax system overhaul, over - time regulations!! Where do we go from here and how soon will any of these items be in place? That is anyone's guess at this time but we will focus on what is for 2017 under current regulations.
EMPLOYEES AND SELF-EMPLOYED individuals will pay the same FICA tax in 2017. Social Security rate is 6.2% on the wage base of $127,200. Medicare tax rate is 1.45% on all compensation. Self-employed individuals pay 12.4% on their earnings of $127,200 and 2.9% on all earnings. An additional .9% Medicare tax rate applies to higher income individuals exceeding applicable threshold amounts.
INDIVIDUALS WITHOUT QUALIFIED HEALTH CARE COVERAGE may still face the (SR Tax) "Shared Responsibility Tax" unless you qualify for exemptions.
REPEAL AND REPLACE ACA is still underway.
NEW 3.8% MEDICARE CONTRIBUTION/SURTAX began in 2013 on net investment income of individuals, estates & trusts above certain thresholds of modified adjusted gross income.
DONATIONS TO CHARITABLE ORGANIZATIONS must be properly substantiated to assure your deduction. Proper documentation for various amounts has to be received by the time you file your return.
IRA's AND OTHER PLAN CONTRIBUTIONS: (certain limitations apply)
• Contribution/deduction limits for IRAs and Roths $5,500 for 2017. Age 50+ may do additional $1,000. You cannot make a contribution to an IRA if you are over 70 ½ but you might qualify to contribute to a non-deductible Roth.
• Maximum elective deferral for 401K contribution is $18,000 for 2017. Age 50+ may contribute an additional $6,000 for 2017.
• RMD - 70 ½ year old must take the Required Minimum Distribution from IRAs by April 1st of the year following the year in which you reached age 70 ½. The RMD for any year after the year you reach 70 ½ must be made by Dec. 31 of that later year. (You can avoid 2 RMDs in same year.)
HSA CONTRIBUTION rates for 2017 are $3,400 for Individuals and $6,750 for Family. Age 55 and older can add $1,000.
FEDERAL LONG TERM CAPITAL GAIN rates are either 0%-15%; for higher-income individuals the rate could be 20%, or 23.8% because of the Net Investment Income surtax.
UP TO 85% of your Social Security Benefits may be includible in taxable income if your income exceeds certain levels. North Carolina excludes the benefits from taxation.
AMT (Alternative Minimum Tax) PATCH is permanent beginning after 2011 and is indexed for inflation each year.
STUDENT LOAN INTEREST deduction of up to $2,500 is available, with phase outs, when income exceeds certain levels.
AMERICAN OPPORTUNITY CREDIT of up to $2,500, and LIFE TIME LEARNING CREDIT of up to $2,000 is available, with phase outs, for 2017.
CHILD TAX CREDIT will remain at $1,000 maximum per child for 2017 with certain limitations.
TEACHERS $250 deduction was extended and will be indexed for inflation going forward.
THE GIFT TAX annual exclusion is $14,000/$28,000 for 2017. Tuition and medicals paid directly to providers by the donor are exempt.
UNIFIED GIFT/ESTATE TAX 2017 Exclusion amount is $5.490 million. Top transfer rate is 40%.
STANDARD BUSINESS MILEAGE RATE for 2017 is $.535; medical & moving rate is $.17, and charitable rate remains at $.14.
FOREIGN FINANCIAL ASSETS (FBAR) - individuals are required to include new disclosures about Foreign Financial Assets with their tax returns for tax years beginning after March 18, 2010. Stiff penalties apply for non-compliance.
N.C. INDIVIDUAL INCOME TAX RATE FOR 2017 IS 5.499%.
(ABLE) "Achieving A Better Life Experience" accounts can be created by disabled individuals or families to support their disabled dependents after December 31, 2014. Contributions are not deductible; earnings are tax free as long as withdrawals are used for qualified disability expenses.
HOME MORTGAGE INTEREST DEDUCTION doubled for unmarried co-owners from a maximum of $1.1 million to maximum of $2.2 million per a reversed Tax Court decision in August, 2015.
NC DISALLOWS a deduction for qualified tuition and related expenses after 2014.
NANNY TAX threshold is still $2,000.
KIDDIE TAX First $1,050 of unearned income is -0- tax, next $1,050 is taxed at Child's Marginal rate, amounts over $2,100 is taxed at parents marginal rate.
Please be aware that tax provisions continually change and you should seek professional guidance in applying any tax provision to a specific situation.
© 2010 Dale K. Cline, CPA, PLLC All Rights Reserved
Updated July 24, 2016