Copyright 2018 - Pfeiffers Accounting & Consulting LLC
  • Doubles estate tax exemption. Estate taxes will apply to fewer people, with the exemption doubled to $11.2 million ($22.4 million for a married couple).
  • Reduces pass-through business taxes. Most owners of pass-through entities such as S corporations, partnerships and sole proprietorships will see their income tax lowered with a new 20 percent income reduction calculation.
  • Cuts some above-the-line deductions. Moving expense deductions get eliminated except for active-duty military personnel, along with alimony deductions beginning in 2019.
  • Weakens the alternative minimum tax (AMT). The bill retains the alternative minimum tax but changes the exemption to $109,400 for joint filers and the phaseout threshold to $1 million. The changes mean the AMT will affect far fewer people than before.
  • Expands use of 529 education savings plans. Tax-deductible contributions to 529 education savings plans can now be used to pay tuition for students in K-12 private schools.

As of 2013, the IRS started limiting itemized deductions depending upon AGI threshold amounts.  The threshold amounts for 2017 are as follows:

 

 Filing Status AGI Threshold (more than)
 Married Filing Joint $311,800.00
 Qualified Widow(er)  $311,800.00
 Head of Household

$287,650.00

 Single  $261,500.00
 Married Filing Separately

 $156,500.00

   

 

 

 

Wages, self employment income, and compensation in excess of certain threshold amounts will be subject to an additional 0.9% Medicare tax in 2012 and on. Note that tips and fringe benefits (wages not paid in cash) are also subject to the additional Medicare tax.

 

Filing Status  Threshold amount
 Married Filing Jointly  $250,000.00
 Married Filing Separately  $125,000.00
 Single  $200,000.00
Head of Household (with qualifying person) $200,000.00
Qualifying Widow(er) with dependent child $200,000.00
   

 

 

 

  • Double standard deductions: The standard deduction nearly doubles to $12,000 for single filers and $24,000 for married filing jointly. To help cover the cost, personal exemptions and most additional standard deductions are suspended.

 

For the year 2015-2017, the maximum contribution you can make to a traditional or roth IRA is $5,500.00 or $6,500.00 (if 50 or older) or your taxable contribution for the year. However, this limit does not apply to rollovers or qualified reservist payments.

Some things to be aware of with the separate plans are:

  • You can't make regular contributions to a traditional IRA if you are older than 70 1/2. You can still make contributions to a Roth IRA regardless of age.
  • You can make rollover contributions to a Roth or traditional IRA regardless of age.

Taxes on excess contributions occur when:

  • You contribute more than the contribution limit (this year $5,500.00 per person or $6,500.00 per person if over 50).
  • Make a regular contribution to a traditional IRA over age 70 1/2.
  • Make an improper rollover to an IRA.

Excess contributions are taxed at a 6% rate per year as long as the contributions remain in the IRA.

Traditional and Roth IRAs detail from IRS site

 

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