A number of changes can be expected for small business tax in 2017. They come courtesy of the Internal Revenue Service (IRS), which is known for making changes on an annual basis, so keeping up to date with them is important. Let’s find out more about the changes pertaining to 2017 small business tax matters.
Changes For Standard Deduction
Those who are married can expect their standard deduction to increase by $100 when they file jointly, which is a total of $12,700. For those who are single, or who are married but file separately, the standard deduction will increase by $50 in 2017, from $6,300 to $6,350. The standard deduction for household heads will be $9,350, which is also $50 more than in 2016.
Changes To Tax Brackets
For 2017, the IRS has made a number of changes to the tax bracket. For instance, the 39.6% rate for those who are single is geared towards earnings of $418,400 or higher, which is a $3,350 increase over the previous year. The tax bracket for those who are married and file jointly will be raised to $470,700 (in 2016 they paid $466,950).
Health Coverage And Maximum Earned Income Credit
In 2017 the amount that is used for the calculation of the penalty resulting from failure to have minimum healthcare coverage is either 2.5 percent of a household’s income or $695, whichever amount is greater. The maximum earned income credit will be raised to $6,318 for those who file jointly and who have a minimum of three children that qualify. This is an increase from $6,269 for last year.
Personal Exemption And Minimum Tax Exemption Alternative
The personal exemption for 2017 will stay the same. However, the new phase outs will start at $216,500, and will reach a maximum of $436,300 when married couples file jointly. The Alternative Minimum Tax for 2017 will begin at $54,300 and will start phasing out for single filers who earn $120,700. The amount for married couples that file jointly starts at $84,500 and the phase out will start at $160,900.
Contribution Limits For Retirement Plans
The government frequently makes changes to the amounts that can be contributed to retirement accounts. However, very few changes are expected for 2017, with most things remaining the same as the previous year. For 2017 a total of $18,000 can be deferred from one’s salary to 401Ks. Those who have an IRA or Roth IRA can contribute a total of $5,500. Those who are a minimum of 50 years of age can make use of catch up contribution to save $1,000 for Individual Retirement Accounts or $6,000 for a 401K.
It will be possible to make contributions towards a Roth IRA when you meet certain conditions, such as earning below $133,000 and filing single or earning below $196,000 and filing jointly as a married couple. You are also eligible if you make less than $10,000 and are filing separately but married. Those who have traditional IRAs will also be able to deduct their IRA contributions under certain circumstances.