SENIORS ARTICLE – FIVE TAX CHANGES FOR 2017 YOU WILL WANT TO KNOW ABOUT
Tax planning is not something most Americans want to think about but having a year-round plan that takes into account the various tax laws can save you a lot of hassle and a little green come tax time. Roughly 80% of all taxpayers wind up receiving a Refund from the federal government. Just a few weeks ago the Internal Revenue Service released its tax changes for 2017 and there are quite a few updates you will want to be aware of.
1. Tax Brackets will be adjusted for inflation. The big change, is that the individual income tax brackets have been adjusted for inflation. The good news is that inflation has been nominal, meaning there was not a large shift upwards in the tax schedule.
Basically, an increase for most of up to $100 more. You probably won’t need to make any year-over-year tax changes unless you expect significant changes in your salary or a large bonus. We have been trending well below the long-term average for inflation for many years.
2. Standard deduction will increase: Your standard deduction will go up a “smidge” in 2017. Individual and Head of Household will see a standard deduction which will be up $50 from 2016. Couples filing jointly get a $100 year-over-year lift. This is not a lot of extra money in your pocket but if anything, can reduce your tax liability without having to lift a finger – that is good news.
3. Traditional & Roth IRA phase-outs will be adjusted higher: The Traditional IRA is the most popular. Traditional IRA are tax-deferred accounts, meaning you will pay tax once you begin making withdrawals during retirement. But, they can also provide an ancillary benefit of lowering your current-year tax liability. For those of you investing with a Roth IRA—a retirement account with no upfront tax deduction, but which has the ability to grow tax-free for life-the individual phase-out to be able to contribute rose $1,000 for single filers to a range of $118,000 to $133,000, while it jumped $2,000 for married couples filing jointly to a range of $186,000 to $196,000, In other words, a few extra people should be able to contribute to a Traditional or Roth IRA in 2017 because of these modest increases.
4. Medical expense deductions will change for certain seniors: Another tax change in 2017 relates to itemizing your medical expenses with the hope of deducting them. Beginning in 2017, everyone will be on the same playing field, If you are 65 & older, your medical expenses will have to top 10% of your AGI before you can itemized medical expenses.
5. Estate Tax Exemption will increase (slightly): Finally, for those of you who have been diligent long-term investors, the estate tax exemption is increasing modestly in 2017. Estates of individual decedents who pass away in 2017 will be exempt up to $5.49 million, a $40,000 increase from 2016 levels. Estate taxes generally affect a small swath of the population.
Simple tips to help CUT YOUR TAX BILL.
CONSIDER HIRING A FINANCIAL ADVISER: Now would be a good time to start looking if you do not have a Financial Adviser.
REMEMBER: 17 APRIL 2018 – DEADLINE……….
Brenda Dever-Armstrong, CEO/Owner/Senior Advisor
The Next Horizon Seniors & Military Advocate/Resources/Locator
*Shared from Sean Williams, B.A. Economics, and Specialist in Senior & Medical