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Tax Facts
Tax Facts
General:
Filing Due Dates
Filing Status
Filing Requirements
Standard Deductions
Personal Exemptions

Earned Income Credit
Standard Mileage Rates
Travel Expenses

Foreign Earned Income Exclusion

Itemized Deductions:
Casualty and Theft Loss Rules
Charitable Contributions
Deductibility of Taxes
Home Mortgage Interest
Medical and Dental Expenses
Investments:
Capital Gain Holding Periods
Capital Gain and Loss Information Table
Investment Expenses
Section 179 Expenses

Dependents:
Dependent Qualifications
Dependent Filing

Filing for Children

Child & Dependent Care Credit
Child Tax Credit
Education Credits and Benefits

Social Security:
FICA Rates
Retirement:
IRA Options

IRA Deduction Phaseout

Retirement Plan Contributions
Retirement Contribution Credit
Elderly and Disabled Credit

Health:

Qualified Long Term Care Premiums
Health Savings Accounts
Sickness and Injury Benefits

IRS:

Record Retention Requirements
Penalties

General
Filing Due Dates
Filing Due Dates
Form 1040 Tax Return 4/17/18
Form 4868 Extension 4/17/18
Form 1040 Tax Return on Extension 10/15/18
Form 1040ES - Estimated tax - 1st Installment 4/17/18
Form 1040ES - Estimated tax - 2nd Installment 6/15/18
Form 1040ES - Estimated tax - 3rd Installment 9/17/18
Form 1040ES - Estimated tax - 4th Installment 1/15/19
Filing Status
Filing Status
Marital Status Conditions

Filing
Status

Single Never married - no dependents S
Never married - with dependents (conditions apply) HH
Married Living together or apart as of 12/31/2017 MJ / MS
Separated (not legally) with dependents HH
Widowed Before 1/1/17, didn't remarry in 2017, no dependents S
In 2017, didn't remarry in 2017 MJ
Before 1/1/16, didn't remarry in 2017, with dependents HH / QW
Spouse died in 2014, 2015, or 2016, and didn't remarry in 2017 and:
1) taxpayer was eligible to file joint in year of death
2) dependent children lived with taxpayer for all of 2017
3) paid more than 50% to maintain home for dependents
QW
Divorced/Legally Separated No dependents S
With dependents (conditions apply) HH
Separated (not legally) Living apart as of 12/31/2017 MJ / MS
If all conditions below apply:
1) both spouses file separate tax returns
2) taxpayers lived apart the last 6 months of 2017
3) paid more than 50% to maintain a home in 2017
4) home was the main home for child for more than 6 months in 2017
5) either spouse can claim child as dependent
HH
Filing Requirements
Who must file a return?
If the taxpayer's filing status is:

and at the end of 2017 the taxpayer was:

the taxpayer must file a tax return if his gross income was at least:

Single under 65 $10,400
65 or older * $11,950
Married, living together at the end of 2017 and filing jointly both spouses under 65 $20,800
one spouse 65 or older * $22,050
both spouses 65 or older* $23,300
Married, living together at the end of 2017, and filing separately any age $4,050
Married and living apart at the end of 2017 any age

$4,050

Head of Household under 65 $13,400
65 or older * $14,950
Qualifying widow(er) with dependent child under 65 $16,750
65 or older * $18,000
* Age 65 or older - even if if born on 1/1/1953.
Standard Deductions
How much is my Standard Deduction?

If the taxpayer's filing status is:

The standard deduction is:

If 65 or over AND/OR blind add for EACH

Single

$6,350

$1,550
Married filing a joint tax return or Qualifying widow(er) with dependent child

$12,700

$1,250

Married filing a separate tax return

$6,350

$1,250
Head of Household

$9,350

$1,550
Dependent Children(1) The greater of $1,050 OR the amount of earned income, plus $350. Not to exceed $5,950 unless the dependent is blind. If blind add $1,550.
(1) The reduced standard deduction rule for dependents applies to dependents who can be claimed on another tax return regardless of whether or not they actually are claimed.
Personal Exemptions
Exemptions Table
Number of Exemptions Allowed Deduction Number of Exemptions Allowed Deduction
1 $4,050 6 $24,300
2 $8,100 7 $28,350
3 $12,150 8 $32,400
4 $16,200 9 $36,450
5 $20,250 10 $40,500
Earned Income Credit
Earned Income Credit
Earned Income Includes The Following:
  • Wages, salaries, and tips
  • Commissions
  • Jury Duty pay
  • Union strike benefits
  • Long-term disability pensions received prior to minimum retirement age
  • Net earnings from self employment

Earned Income Does Not Include The Following:

  • Interest and dividends
  • Social security and railroad retirement benefits
  • Welfare benefits
  • Pensions or annuities
  • Veterans' benefits (including VA rehabilitation payments)
  • Workers' compensation benefits
  • Alimony
  • Child support
  • Unemployment compensation (insurance)
  • Taxable scholarship or fellowship grants that were not reported on Form W-2
  • Variable housing allowance for the military
  • Earnings for work performed while an inmate at a penal institution.

A Qualifying Child Must:

  • be a son, daughter, stepchild, adopted/foster child, brother, sister, stepbrother, stepsister, or a descendent of any of them (i.e. grandchild)
  • be under age 19, or under age 24 and a full time student (enrolled full time during any 5 months)
  • be any age if permanently disabled
  • not provide more than one-half of his or her own support
  • have lived with the taxpayer for more than 6 months in the United States, except in the case of newborns and adoption. A full year is required for foster care
  • have an SSN, unless the child was born and died during the tax year
  • be younger than the person claiming him/her
  • not have filed a joint tax return other than to claim a refund

To Qualify, All Of The Following Tests Must Be Met:

  • the taxpayer must have earned income
  • the taxpayer's filing status cannot be married filing separately
  • the taxpayer cannot be the qualifying child of another person
  • the taxpayer must include his SSN on the return, and if married, that of his spouse
  • earned income and AGI must each be less than: 
Number of children Single Married Filing Jointly
No qualifying children $15,010 $20,600
One qualifying child $39,617 $45,207
Two qualifying children $45,007 $50,597
More than two qualifying child $48,340 $53,930

Disqualified income
The taxpayer is not eligible for the earned income credit if he had "disqualified income" exceeding $3,450. Disqualified income includes both taxable and tax exempt interest, dividends, net rent and royalty income, net capital gains, and net passive income that is not self employment income.

Claiming The Earned Income Credit Without A Qualifying Child
If the taxpayer does not have a qualifying child, then the taxpayer must

  • have earned income as detailed above
  • have a main home in the US for more than six months of the tax year
  • be at least 25 years old, but under age 65, at the end of the tax year. On joint returns either spouse may satisfy this test
  • file a joint tax return if married, unless the taxpayers lived apart for the last six months of the tax year, and this taxpayer qualifies to file as Head of Household
  • not be the dependent or qualifying child of another taxpayer. This rule includes a spouse
  • include his SSN on the return, and if married, that of his spouse

Tie-Breaker Rules
If both parents are eligible to claim the credit for the same qualifying child and they do not file a joint return the parent with whom the child resided for the longer period of time during the tax year claims the credit. If the child lived with each parent for the same amount of time the parent with the higher AGI claims the credit.

If a parent and one or more non-parents are entitled to claim the child as a qualifying child, only the parent may claim the credit. If none of the persons entitled to claim the child are a parent the person with the higher AGI claims the credit.

Married Children
If the taxpayer's child was married at the end of the tax year, he or she can be the taxpayer's qualifying child only if the taxpayer can claim an exemption for the child.

Nonresident Aliens
An individual who is a nonresident alien for any part of the tax year is not eligible for the credit unless he or she is married and an election is made by the couple to have all of their worldwide income subject to U.S. income tax.

Standard Mileage Rates
Mileage Rates
Type of Mileage 2017 2016
Business* 53.5¢ per mile 54¢ per mile
Medical/Moving 17¢ per mile 19¢ per mile
Charitable 14¢ per mile 14¢ per mile
*These tax deductible rates are available for individuals who own the vehicle and operate only one vehicle for business purposes at a time. The election to use this method must be made during the first tax year the vehicle is used for business.
Travel Expenses
What travel expenses are deductible?
The following travel expenses may be tax deductible:
Expense Description
Transportation The cost of travel by airplane, train, bus, or car between your home and your business destination.
Taxi, commuter, bus & limousine Fares for these and other types of transportation between the airport or station and your hotel or between the hotel and your work location away from home.
Baggage & shipping The cost of sending baggage or display material between your regular and temporary work locations.
Car The cost of operating and maintaining your car when traveling away from home on business. You may deduct actual expenses or the standard mileage rate, including business-related tolls and parking on your tax return. If you lease a car while away form home on business, you can deduct on your tax return business-related expenses only.
Lodging The cost of lodging if your business trip is overnight or long enough to require you to get substantial sleep or rest to properly perform your duties.
Meals The cost of meals only if your business trip is overnight or long enough to to require you to get substantial sleep or rest. Includes amounts spent for food, beverages, taxes, and related tips.
Cleaning Cleaning and laundry expenses while away from home overnight.
Telephone The cost of business calls while on your business trip, including business communication by fax machine or other communication devices.
Tips Tips you pay for any expenses in this chart.
Other Other similar ordinary and necessary expenses related to your business travel such as public stenographer's fees and computer rental fees.
Foreign Earned Income Exclusion
Foreign Earnings Tax Exclusion

Tax Year

Excludable amount
1998 $72,000
1999 $74,000
2000 $76,000
2001 $78,000
2002-2005 $80,000
2006 $82,400
2007 $85,700
2008 $87,600
2009 $91,400
2010 $91,500
2011 $92,900
2012 $95,100
2013 $97,600
2014 $99,200
2015 $100,800
2016 $101,300
2017 $102,100

Itemized Deductions

Casualty and Theft Loss Rules
Casualty or Theft Loss Deduction Rules
These tax rules apply to a casualty or theft loss of nonbusiness property.

$100 Rule

10% Rule

Definition of Rule You must reduce each casualty or theft loss by $100 when figuring your tax deduction. Apply this rule after you reduce your loss by any reimbursement. You must reduce your total casualty or theft loss by 10% of your adjusted gross income. Apply this rule after you reduce each loss by any reimbursement and by $100 (the $100 Rule).
Single Event Apply this rule only once, even if many pieces of property are affected. Apply this rule only once, even if many pieces of property are affected.
More Than One Event Apply this rule to the loss from each event. Apply the rule to the total of all your losses from all events.
More Than One Person
With loss from the same event (other than a married couple filing jointly.)
Apply the rule separately to each person. Apply the rule separately to each person.
Married Couple
with loss from the same event:


Apply this rule as if you were one person.

Apply this rule separately to each spouse.



Apply this rule as if you were one person.

Apply this rule separately to each spouse.

Filing joint IRS tax return

Filing separate IRS tax return

 

More Than One Owner
(other than a married couple filing jointly.)
Apply this rule separately to each owner of jointly owned property. Apply this rule separately to each owner of jointly owned property.
Charitable Contributions
Are all contributions deductible?
Use the following list for a quick check of charitable contributions you can or cannot deduct on tax returns. Consult Publication 17 for more information and additional rules or limitations that may apply.
Deductible as Charitable Contributions NOT Deductible as Charitable Contributions
Money or property for:
  • A student living with you, sponsored by a qualified organization.
  • Churches, synagogues, temples, mosques and other religious organizations.
  • Dues, fees, and assessments paid to qualified organizations above the value of benefits received.
  • Fair market value of used clothing and furniture
  • Federal, state and local governments, if you contribution is solely for public purposes (for example, a gift to reduce the public debt.)
  • Fraternal orders (if used for qualified purposes)
  • Nonprofit schools and hospitals
  • Nonprofit medical research organizations
  • Out of pocket expenses when you serve a qualified organization as a volunteer.
  • Public parks and recreation facilities.
  • Salvation Army, Red Cross, CARE, Goodwill Industries, United Way, Boy Scouts, Girl Scouts, Boys and Girls Clubs of America, World Wildlife Fund, etc.
  • The part of a contribution above the fair market value for items such as merchandise and tickets to charity balls or sporting events
  • Un-reimbursed transportation expenses that relate directly to the services provided for the organization
  • Upkeep of uniforms that have no general use but must be worn while performing services donated to a charitable organization
  • War veterans' groups and certain cultural groups.
Money or property for:
  • Civic leagues and associations, business organizations, social and sports clubs, labor unions, and Chambers of Commerce.
  • Raffle, bingo or lottery tickets.
  • Dues, fees, or bills paid to country clubs, lodges, fraternal orders, or similar groups.
  • Foreign organizations (except certain Canadian and Mexican charities).
  • Groups that are run for personal profit.
  • Groups whose purpose is to lobby for law changes.
  • Homeowners' associations
  • Individuals
  • Political groups or candidates for public office.
  • Sickness or burial expenses for members of a fraternal society.
  • Value of blood given to a blood bankor Red Cross..
  • Value of your time or services.

 

Deductibility of Taxes
Which taxes can I deduct?
Tax

You CAN deduct the 
following taxes

You CANNOT deduct the following taxes

Income Tax State and local income tax.
Foreign income tax.
Employee contributions to state funds listed under State benefit funds.
Federal income tax.
Employee contributions to private or voluntary disability plans.
Real Estate Tax State and local real estate tax.
Foreign real estate tax.
Tenant's share of real estate tax paid by cooperative housing corporation.
Tax for local benefits.
Trash and garbage pickup fees.
Rent increase due to higher real estate tax.
Homeowners association charges.
Personal Property Tax State and local personal property tax.
Sales Tax State and Local sales taxes are deductible provided you make the election on Schedule A, line 5, to claim them in lieu of State and Local income taxes.
Other Tax Tax that is an expense of your trade or business or producing income.
One half of self employment tax paid.
Tax on property producing rent or royalty income.
Occupational tax.
Taxes on alcoholic beverages, cigarettes, and tobacco. Taxes on gasoline, diesel, and other motor fuels used in a non-business vehicle. Federal social security (FICA), railroad retirement, gift, and excise taxes or customs duties. (See IRS Publication 17 for details.)
Fees and Charges Fees and charges, such as those for driver's, hunting, fishing, or dog licenses; or water, sewer, and utility taxes or bills, generally are not tax deductible. (See IRS Publication 17 for details.)
Home Mortgage Interest
Home Mortgage Interest
Home mortgage interest is generally deductible provided:
  • the loan is secured by a principal residence or second home
  • acquisition debt for transactions entered into after 10/13/87 does not exceed $1,000,000
  • home equity debt does not exceed the lesser of $100,000 or the fair market value of the home

The $1,000,000 limit is inclusive of all of the above.

Medical and Dental Expenses
What Medical & Dental expenses are deductible?

You CAN deduct the following...

You CANNOT deduct the following...

  • Admission and transportation to a medical conference relating to the chronic disease of a dependent, if it is primarily for and essential to the care of the dependent 
  • Birth control pills prescribed by your doctor
  • Capital expenses for equipment or improvements to your home needed for medical care, or to make the home suitable for a disabled person. (See IRS tax Publication 502)
  • Cost and care of guide dogs or other animals aiding the blind, deaf or disabled.
  • Cost of lead-based paint removal (See IRS tax Publication 502)
  • Dental and orthodontic care
  • Expenses of an organ donor.
  • Hospital services fees (lab work, therapy, nursing services, surgery, etc.)
  • Legal abortion
  • Legal operation to prevent having children.
  • Meals and lodging provided by a hospital during medical treatment.
  • Medical, hospital, dental and long-term care insurance premiums (subject to the age limits) (See IRS tax Publication 17 for details).
  • Medical services fees (from doctors, dentists, surgeons, specialists, and other medical practitioners.)
  • Medicare A premiums for persons not enrolled in Social Security, and Medicare B premiums
  • Oxygen equipment and oxygen
  • Part of life-care fee paid to retirement home designated for medical care.
  • Prescription medicines (those requiring a prescription by a doctor for their use by an individual) and insulin.
  • Psychiatric care at a specially equipped medical center (includes meals and lodging.)
  • Social Security tax, Medicare tax, FUTA, and state employment tax for worker providing medical care (See Wages for nursing services below.)
  • Special items (artificial limbs, false teeth, eyeglasses, contact lenses, hearing aids, crutches, wheelchairs, braces, etc.)
  • Special school or home for mentally or physically disabled persons (see IRS tax Publication 502 for details).
  • Stop smoking programs, including cost of prescription drugs designed to alleviate nicotine withdrawal.
  • Transportation for needed medical care at the IRS published rate per mile, or actual out-of-pocket expenses, plus parking fees and tolls. (See IRS tax Publication 17 for details).
  • Treatment at drug or alcohol center (includes meals and lodging provided by the center.)
  • Wages for nursing services ( see IRS tax Publication 502)
  • Weight-loss programs to treat obesity and other diseases diagnosed by a physician
  • Diaper service
  • Diet foods
  • Expenses for your general health (even if following your doctor's advice. However if you doctor has recommended a program as treatment for a specific condition, the IRS has indicated that the cost would be deductible) such as

- Health club dues
- Household help (even if recommended by a doctor.)
- Social activities, such as dancing or swimming lessons.
- Trip for general health improvement.
- Weight loss program.

  • Funeral, burial or cremation expenses.
  • Illegal operation or treatment.
  • Life insurance or income protection policies, or policies providing payment for loss of life, limb, sight, etc.
  • Maternity clothes
  • Meals and lodging while attending a medical conference related to the chronic disease of a dependent
  • Medical expenses paid from a medical savings account (MSA).
  • Medical expenses paid from a flexible savings account (FSA)
  • Medical insurance included in a car insurance policy covering all persons injured in or by your car.
  • Medical insurance premiums paid with pre-tax dollars
  • Medicine you buy without a prescription.
  • Nonprescription drugs or medicines.
  • Nonprescription nicotine gum, patches, or lozenges.
  • Nursing home policies, if the policy ensures a maximum out-of-pocket expense per day.
  • Babysitting, childcare, and nursing care for a healthy baby.
  • Payroll tax paid for Medicare A.
  • Surgery for purely cosmetic reasons.
  • Toothpaste, toiletries, cosmetics, etc.

Investments

Capital Gain Holding Periods
Holding Periods
Asset Held for... Your capital gain is...
One year or less Short term. Report this on Part I of Form 8949 and Schedule D.
More than one year Long term. Report this on Part II of Form 8949 and Schedule D.
Capital Gain and Loss Information Table
Gain and Loss Information Table
If you sold... Your gain is... Your loss is... Report it on...
Stocks, Bonds, Mutual Fund shares, or land held for investment purposes Capital Gain. See Holding Periods. Capital Loss. See Holding Periods. Form 8949 and Schedule D. The totals transfer to Form 1040.
Accounts or Notes receivable acquired in the ordinary course of business or from sales of inventory or property held for sale to customers. Inventory of a business held for sale to customers. Ordinary income. Ordinary loss. Form 1040, Schedule C if self-employed; Schedule F if a farmer; Form 1065 if a partnership; Form 1120/1120-S for a corporation.
Depreciable: residential rental property, cars, trucks, computers, machines, fixtures, equipment, used in your business. IRC section 1231 determines whether the gain is ordinary income or capital gain. Ordinary loss if there is a net IRC section 1231 loss. Form 1040,
Form 4797
Personal residence, autos, jewelry, furniture, art, coin or stamp collections, held for personal use. Capital Gain. See Holding Periods. Not tax deductible. Although profits are taxable, losses are not tax deductible. Form 8949 and Schedule D. The totals transfer to Form 1040.
Investment Expenses
Deductible Investment Expenses
The following investment expenses may be tax deductible:
  • Accounting fees for record keeping;
  • Expenses of proxy fights when legitimate corporate policies are involved;
  • Fees for collecting taxable interest and dividends;
  • Fees shown in Box 5 of Form 1099-DIV;
  • Guardian fees of a minor incurred in collecting or producing income;
  • Investment manager and planner fees to the extent that they relate to taxable income;
  • IRA setup and administration fees;
  • Legal fees;
  • Premiums for indemnity bonds for replacing missing securities;
  • Safe deposit box fees used exclusively to hold taxable income generating securities and investments;
  • Salaries of persons hired to keep records of your taxable investment income; and
  • Subscriptions to investment services.
Section 179 Expenses
What are the Section 179 expense maximums?
Year Maximum Tax Deductible Expense
1996 $17,500
1997 $18,000
1998 $18,500
1999 $19,000
2000 $20,000
2001 $24,000
2002 $24,000
2003 $100,000
2004 $102,000
2005 $105,000
2006 $108,000
2007 $125,000
2008 $250,000
2009 $250,000
2010 - 2016 $500,000
2017 $510,000
IRC Section 179 allows taxpayers to write-off a fixed amount of capital expenditures on their tax return each tax year ($510,000 in 2017), rather than depreciate them over multiple tax years. The maximum expensing tax deduction for an automobile placed in service in 2017 is $11,160.

There are two primary limitations. 
  • The first reduces the amount that can be expensed on the  tax return under this section if taxpayers acquire more than $2,030,000 in Section 179 eligible property during the tax year. The available $510,000 tax deduction is reduced dollar for dollar for each dollar of Section 179 property placed in service during the tax year above $2,030,000. If $2,540,000 of Section 179 property is placed in service the available tax deduction is $0.
  • The second limitation is that Section 179 expense cannot be greater than the net income generated by the business for which the property was acquired.

Dependents

Dependent Qualifications
Dependent Qualifications
Is this a Qualifying Child?
To be a Qualifying Child he/she must:
  • Be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, OR a descendent of any of them such as a niece or grandchild; and
  • Be under age 19 - or age 24 if a student - or any age if permanently and totally disabled; and
  • Have lived with you for more then one-half of the year. Exceptions apply for parents divorced or separated during the year and for children supported by two or more taxpayers.
  • You provided over one-half of his/her support.
Is the Qualifying Child a Dependent?
For a Qualifying Child to be a dependent he/she must:
  • Be a U.S. citizen or national, a resident alien, or resident of Mexico or Canada; and
  • Not be married. If the dependent is married he cannot file a joint return unless the return is to claim a refund and no tax liability would exist for either spouse had they filed separately; and
  • Not be claimed as a dependent on someone else's return.
Is a Qualifying Relative a Dependent?
A relative may qualify as a dependent if:
  • He/she is a person other than a spouse who lived in your home all year as a member of your household if the relationship did not violate the law and the two criteria above are met; and
  • He/she is not a qualifying child of another taxpayer for the year; and
  • He/she had gross income of less than the exemption amount of $4,050; and
  • You provided over one-half of his/her support.
Dependent Filing
Dependent Filing
Single Dependents NOT either age 65 or older or blind Must file a return if any of the following apply:
  • Unearned income was more than $1,050
  • Earned income was more than $6,350
  • Total earned and unearned income was more than the larger of $1,050 or earned income up to $6,000 plus $350.
Single Dependents either age 65 or older or blind Must file a return if any of the following apply:
  • Unearned income was more than $2,600 ($4,150 if 65 or older or blind)
  • Earned income was more than $7,900 ($9,450 if 65 or older or blind)
  • Gross income was more than the larger of $2,600 ($4,150 if 65 or older or blind) OR your earned income was $6,000 plus $1,900 ($3,450 if 65 or older or blind)
Married Dependents NOT either age 65 or older or blind Must file a return if any of the following apply:
  • Gross income was at least $5 and the spouse files a separate return and itemizes deductions
  • Earned income was more than $6,350
  • Unearned income was more than $1,050
  • Total earned and unearned income was more than the larger of $1,050 or earned income up to $6,000 plus $350.
Married Dependents either age 65 or older or blind Must file a return if any of the following apply:
  • Earned income was more than $7,600 ($8,850 if 65 or older or blind)
  • Unearned income was more than $2,300 ($3,550 if 65 or older or blind)
  • Gross income was at least $5 and your spouse files a separate return and itemizes deductions
  • Gross income was more than the larger of $2,300 ($3,550 if 65 or older or blind) or your earned income was $6,000 plus $1,600  ($2,850 if 65 or older or blind)
Filing for Children
Filing for Children
The taxpayer may use Form 8814 to include a child's income on the parent's tax return if all of the following conditions are met:
1. The child is under age 19 (or age 24 if a full-time student) on 1/1/2018.
2. The child is required to file a tax return.
3. The child has unearned income only.
4. The child's gross income is less than $10,500.
5. There was no withholding or estimated payments made for the child.
6. The child does not file a joint tax return.

If the child is under age 19 and there is investment income of $2,100 or more and  Form 8814 is not filed, the child must file a tax return and include Form 8615.

Child & Dependent Care Credit
Child & Dependent Care Credit

Maximum Allowable Child and Dependent Care Tax Credit

Adjusted Gross Income Credit Percentage One Dependent Two or more Dependents
$15,000 or less 35% $1,050 $2,100
$15,001-$17,000 34% $1,020 $2,040
$17,001-$19,000 33% $990 $1,980
$19,001-$21,000 32% $960 $1,920
$21,001-$23,000 31% $930 $1,860
$23,001-$25,000 30% $900 $1,800
$25,001-$27,000 29% $870 $1,740
$27,001-$29,000 28% $840 $1,680
$29,001-$31,000 27% $810 $1,620
$31,001-$33,000 26% $780 $1,560
$33,001-$35,000 25% $750 $1,500
$35,001-$37,000 24% $720 $1,440
$37,001-$39,000 23% $690 $1,380
$39,001-$41,000 22% $660 $1,320
$41,001-$43,000 21% $630 $1,260
$43,001 and over 20% $600 $1,200
Child Tax Credit
Child Tax Credit
Form 8812 - The amount per child for 2017 tax returns is $1,000.

Qualifications:
The child must be a dependent under age 17 AND -
1. A son, daughter, stepchild, adopted/foster child, brother, sister, stepbrother, stepsister, or a descendent of any of them (i.e. grandchild).
2. Any age if permanently disabled.
3. The child did not provide more than one half of his own support.
4. The child must be a citizen or resident alien.

If there are three or more children an additional refundable credit may be possible even if no tax is owed.

Education Credits and Benefits

Education Credits and Benefits
Name Duration Amount Covered Expense
American Opportunity Credit 4 years Post Secondary $2,500 per yr. per student. (100% of the 1st $2,000, 25% of the next $2,000). 40% of the credit is refundable.  Tuition, Fees, Books and supplies paid to school. No room and board.
Lifetime Learning Credit Post Secondary $2,000 for each taxpayer and dependent. (20% of the 1st $10,000) Tuition, Fees, Books and supplies paid to school. No room and board.
Coverdell ESA Secondary, Post Secondary, Elementary $2,000 per student per year. Contributions are non-deductible. Earnings accrue tax free. Tuition, Fees, Books, Supplies, Equipment and Room and Board. Must be enrolled 1/2 the time.
Student
Loan Interest
Post Secondary programs $2,500 per year.  Qualified student loan interest.
QTP (QSTP & 529s) State Programs - Post Secondary $14,000. Contributions are non- deductible. Earnings accrue tax free if used for college. Gift taxes apply. Tuition, Fees, some Supplies and some Room and Board
EE Savings Bonds Post Secondary Unlimited interest exclusion. Tuition and Fees. Not Books and supplies. Not room and board.
Tuition & Fees Deduction Post Secondary $4,000 per year. Qualified Tuition and Fees.  Not room and board.

Social Security

FICA Rates
What are the FICA tax rates?
Maximum Wages Subject to Social Security tax $127,200.00
Social Security tax rate (Employee)  6.20%
Maximum Social Security tax (Employee) $7,886.40
Social Security tax rate (Employer)  6.20%
Maximum Social Security tax (Employer)  $7,886.40
Social Security tax rate (Self Employed) 1 12.40%
Maximum Social Security tax (Self Employed) 1 $15,772.80
Maximum Wages Subject to Medicare tax Unlimited
Medicare tax rate (Employee)  1.45%
Medicare tax rate (Employer)  1.45%
Medicare tax rate (Self Employed) 2.90%
Footnotes:
1
Self employed persons are entitled to deduct one-half of their self employment tax as an Adjustment to Income on Line 27 of Form 1040.

Retirement

IRA Options
IRA Options
Feature Regular IRA Roth IRA Coverdell ESA
Annual Contribution $5,500 (+$1,000 if 50 or over) $5,500 (+$1,000 if 50 or over) $2,000 per student
Contribution Deductible Yes No No
Contribution Deadline April 15th following year April 15th following year April 15th following year
Contributions End Age 70 1/2 Continue indefinitely Student if age 18
Earnings Tax deferred Tax free if held over 5 years Tax free if used for qualified education expense
Withdrawals Taxed as ordinary income if over age 59 1/2 Tax free if held over 5 years and over age 59 1/2 Tax free for qualified education expense if under age 30
Withdrawal Penalty 10% if under age 59 1/2 unless for medical, health insurance if unemployed, higher education, 1st home up to $10,000, disability, or death. * 10% and earnings are taxed as ordinary income if under age 59 1/2 unless for 1st home up to $10,000, disability, or death. Withdrawals are contribution 1st, taxable earnings 2nd. 10% and earnings taxed if not used for qualified education expenses or if after student's 30th birthday.
Distributions Mandatory at age 70 1/2 Non-mandatory Mandatory before age 30
Rollover Yes. Taxed if rolled into a Roth IRA. Yes, into most other IRAs. May be rolled over into another child's Coverdell ESA or IRA.
* Withdrawals can also be taken in substantially equal distributions to avoid the withdrawal penalty.
IRA Deduction Phaseout
IRA Contribution Phase-Out Rules
If the taxpayer or spouse is covered by a retirement plan at work the tax deduction begins to phase out at:
  • $62,000 if the taxpayer's filing status is single, head of household, or married filing separately and he lived apart from his spouse for all of 2017;
  • $99,000 if the taxpayer's filing status is married filing jointly and both the taxpayer and spouse are active plan participants, or the taxpayer is a qualifying widow or widower;
  • $99,000 if the taxpayer's filing status is married filing jointly and the taxpayer is active plan participant but the spouse is not. The spouse uses the $186,000 threshold;
  • $186,000 if the taxpayer's filing status is married filing jointly and the taxpayer was not an active plan participant but the spouse was. The spouse uses the $99,000 threshold; and
  • $0 if the taxpayer's filing status is married filing separately and he lived with the spouse at any time in 2017.

These limits will rise in future years. 

Phase-outs
If the phase-out threshold is...

The tax deduction
phases out at...

No tax deduction
is allowed at...

$62,000 $62,001-$72,000 $72,000 +
$99,000 $99,001-$119,000 $119,000 +
$186,000 $186,001-$196,000 $196,000 +
$0 $0-$9,999 $10,000 +
Retirement Plan Contributions
Retirement Plan Contributions
Contribution limits are the lesser of:
SEPs $53,000 or 25% of the participants compensation, not to exceed $265,000
SIMPLE IRAs Lesser of $12,500 (add $3,000 if age 50 or over) or total compensation. There is no % of income limit. The compensation limit is $265,000. Employer contribution of 2% of all employee compensation over $5,300 OR 3% of participating employee compensation.
401(k) Plans, 403(b) Plans,
and SARSEPs
Under age 50 - Elective deferrals up to $18,000. Age 50 or older - Elective deferrals up to $24,000. The total of employer and employee contributions cannot exceed $53,000.
Defined Contrib- ution Plans $53,000 or 100% of employee taxable compensation, not to exceed $265,000 in compensation.
Defined Benefit Plans The amount needed to provide an annual retirement benefit no larger than the smaller of:
  • $210,000
  • 100% of the average taxable compensation for the highest three consecutive years, not to exceed $265,000
The compensation amounts used above are after the deduction of the contribution AND Self Employment Tax.
Retirement Contribution Credit
Retirement Contribution Credit

A nonrefundable credit is available for contributions to retirement savings plans. The credit is in addition to the deduction (or income exclusion) of the contribution. The credit is equal to the applicable percentage (based on income and filing status), times qualified retirement plan contributions (not to exceed $2,000 of contributions - resulting in a maximum credit of $1,000 at a 50% credit rate).

2017 Credit Phaseout - Modified Adjusted Gross Income

Credit Rate Married Filing Joint Head of Household Single | MFS | QW
50% $0 - $37,000 $0 - $27,750 $0 - $18,500
20% $37,001 - $40,000 $27,751 - $30,000 $18,501 - $20,000
10% $40,001 - $62,000 $30,001 - $46,500 $20,001 - $31,000
0% Over $62,000 Over $46,500 Over $31,000
Contributions to many plans qualify including 401(k), SEP, SIMPLE, Keogh, IRA (traditional and Roth), 403(b), and voluntary after-tax qualified plans. The contribution used to calculate the credit must be offset by certain retirement plan distributions.

Contributions to a qualified retirement plan must be made by an eligible individual, defined as:

  • At least 18 years of age at year end
  • Not a dependent of another taxpayer, and
  • Not a student (generally full time)
Elderly and Disabled Credit 
Elderly and Disabled Credit
Dollar Limits for Eligibility
Filing Status

Nontaxable:
Social Security,
Pensions, Retirement
Disability less than:

and AGI less than:

Single (HH or or Qual. Widower) Age 65 or older,
or under age 65 and retired or disabled
$5,000 $17,500
Married Joint - Both spouses age 65 or over $7,500 $25,000
Married Joint - Both spouses under age 65,
one spouse retired or disabled
$5,000 $20,000
Married Joint - Both spouses under age
65, both spouses retired or disabled
$7,500 $25,000
Married Joint - One spouse age 65 or older, other
spouse under age 65 and retired or disabled
$7,500 $25,000
Married Joint - One spouse age 65 or older, other
spouse under age 65 and NOT retired or disabled
$5,000 $20,000
Married Separate - live apart all year, age 65 or
older, or under age 65 and retired or disabled.
$3,750 $12,500

Health

Qualified Long Term Care Premiums
Deductible Long Term Care Premiums
Age On The Last Day Of The Year Maximum Tax Deductible Premium
Under 41 $410
41-50 $770
51-60 $1,530
61-70 $4,090
Over 70 $5,110
Benefits paid by qualified long term care policies:
To the extent that they reimburse long term care expenses, benefits paid by an indemnity type contract are tax free. Benefits paid by a per diem contract are tax free up to $360 per day.
Health Savings Accounts
Health Savings Accounts
Qualifications:
  • taxpayer must be in a qualified high deductible medical insurance plan
  • taxpayer must not be covered under another health plan or enrolled in Medicare Parts A or B
  • taxpayer cannot be claimed as a dependent

Qualified High Deductible Health Plan

Coverage

Minimum Annual Deductible

Total annual deductible and out of pocket expenses *
Self $1,300 $6,550
Family $2,600 $13,100
* This limit does not apply if the plan uses a network of providers.

Maximum HSA Contribution Limits

1. The maximum Health Spending Account (HSA) contribution limits for a Single taxpayer is $3,400. For a Family it is $6,750.
2. The taxpayer may add $1,000 to catch up if the taxpayer is between the ages of 55 and 64. $2,000 for family's.
3. If the taxpayer is eligible for an HSA during the last month of the year he is eligible for every month.
4.
Reduce the contribution limits for any other Archer MSA's or HSA's.
5. HSA contribution limits are no longer limited to the annual deductible under the insurance plan.
6. Excess contributions are subject to a penalty of 6%.
7. Participation in a Flexible Spending Account (FSA) is disregarded in determining eligibility for an HSA provided the balance of the FSA is $0 at year end OR the taxpayer is making a qualified HSA distribution equal to the balance in the FSA.
Sickness and Injury Benefits
Are Your Sickness and Injury Benefits Taxable?
Please Note: This table is intended as a general overview. Additional tax rules may apply depending on the tax situation. For more information about benefits, see "Other Sickness and Injury Benefits" in IRS Publication 17.

Type of Benefit

General Rule

Workers' Compensation Not taxable if paid under a workers' compensation act or a statute in the nature of a workers' compensation act and paid due to a work related sickness or injury. However, payments received after returning to work are taxable.
Federal Employees' Compensation Act (FECA) Not taxable if paid because of personal injury or sickness. However, payments received as "continuation of pay" for up to 45 days while a claim is being decided and pay received for sick leave while a claim is being processed are taxable.
Compensatory Damages Not taxable if received for injury or sickness.
Accident or Health Insurance Benefits Not taxable if the taxpayer paid the insurance premiums.
Disability Benefits Not taxable if received for loss of income or earning capacity due to an injury covered by a "no-fault" automobile policy.
Compensation for Permanent Loss or Loss of Use of a Part or Function of Your Body, or for Permanent Disfigurement Not taxable if paid due to the injury. The payments must be figured without regard to any period of absence from work.
Reimbursements for Medical Care Not taxable - but the reimbursement may reduce the taxpayer's medical expense deduction.

IRS

Record Retention Requirements
Record Retention Requirements
How long should a taxpayer keep tax related records:
  • retain records for 3 years from the time the tax return was due, filed, or amended; or 2 years form the date the tax was paid, whichever is later
  • retain records for 6 years if the tax is underpaid by 25% or more
  • retain records forever if there is a fraud or failure to file issue
  • retain capital gain/loss, net operating loss, and similar records which may form the basis of claims made on future tax returns indefinitely.
Penalties
Tax Penalties
Infraction: Penalty
Late Filing
(If the tax return is more than 60 days late, the minimum penalty is the smaller of $100 or 100% of the tax owed.)

5% per month of the net tax due (maximum 25%)

Late filing due to fraud

15% per month of the net tax due (maximum 75%)

Late tax payments

0.5% per month of the unpaid tax due (maximum 25%) The 0.5% rate increases to 1% after the  IRS issues a notice of intent to levy.

Negligence or disregard of tax rules and regulations

20% of tax underpayment

Fraud

75% of tax underpayment

Substantial understatements of income tax (tax underpayments that exceed the greater of 10% of the correct tax liability or $5,000) 20% of tax underpayment
Over valuations of 200% or more but less than 400% of the correct amount 20% of tax underpayment
Over valuations of 400% or more of the correct amount 40% of tax underpayment
Estate tax and gift tax under valuations of 50% or more of the correct valuation and if the tax underpayment exceeds $5000 20% of tax underpayment
Estate tax and gift tax under valuations of 75% or more of the correct valuation and if the tax underpayment exceeds $5000 40% of tax underpayment
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