1. In regard to retirement plans, the maximum contribution limits
for 2017 are outlined below:
Traditional & Roth IRA's for Taxpayers under 50|| $
Traditional & Roth IRA's for Taxpayers over 50|| $ 6,500|
for Taxpayers under 50|
for Taxpayers over 50|| $24,000|
& Defined Contribution Plans for Taxpayers under 50|| $54,000|
& Defined Contribution Plans for Taxpayers over 50|| $54,000|
2. For 2017 the IRS allows a deduction for your automobile at various rates depending on the
usage. The details are outlined below:
used for business|| 53.5 cents per mile|
Car used for charitable purposes|| 14 cents per mile |
Car used for medical or moving purposes|| 17 cents per mile|
3. Child care tax credits for summer day camp and babysitters are still available for children under 13 years
of age if both parents work.
4. In regard to the "kiddie" tax the law increases the age
from 14 to 18 regarding investment income. If the child is under 25 and still in college and they have investment
income of over $2,100 they will be taxed at their parents' rate instead of the individual rate.
minimum corporate tax in New Jersey is now based on gross receipts and ranges from $500 to $2,000 for 2017.
6. The New Jersey Homestead rebates for a homeowner now range from $1,000 to $2,000 for 2017.
7. The threshold for the deduction of unreimbursed medical expenses has been increased from
7.5% of your adjusted gross income to 10%.
8. The tax rate on dividend income is generally 15%
for 2017. However, if in the top tax bracket then the rate is 20%.
9. The maximum tax
rate on capital gains is 15% for 2017 if your taxable income is under $470,700 on a joint return. If over $470,700,
the capital gain rate rises to 20%.
10. A Medicare surtax of 0.9% will be
assessed on W-2 employee compensation or self-employment income if you earn over $250,000 on a joint return.
11. There is a 3.8% Medicare surtax on net investment income if your modified adjusted gross
income is over $250,000 on a joint return. Net investment income includes, interest, dividends, capital gains, annuities,
royalties and passive rental income. It does not include tax-free interest or distributions from retirement plans and
12. For flexible spending accounts (FSA) over the counter medications are no longer eligible.
In 2017, the maximum annual FSA contribution for each employee will be capped at $2,600.
13. Under the
American Opportunity Tax Credit there is a $2,500 maximum credit for qualified higher education expenses such as college.
However the credit phases out for married couples earning over $160,000.
14. In 2017, there are no
estate taxes at the federal level unless your estate is over $5,490,000. In New York the estate must be over
$5,250,000 in order to be taxed. The annual gift tax exclusion is $14,000 per donee in 2017.
2017, the exemption from New Jersey Estate tax will increase from $675,000 to $2 million. In 2018, the estate tax will
be totally eliminated in New Jersey. However, the New Jersey Inheritance tax will remain in effect with no change during
the same time period. This is a tax assessed on transfers to beneficiaries other than spouses, parents, or children.
Therefore, it would be imposed on nieces, nephews, siblings and friends. The New Jersey Inheritance tax rates range
from 11% to 16% based on taxable income.
15. If your adjusted gross income is over $313,800
on a joint return, your itemized deductions are reduced by 3%.
16. The Social Security wage base has
increased to $127,200 for 2017. If you start collecting Social Security at age 62, you will be subject to
a 25% discount. If you are between the age of 62-66, you can earn up to $15,120 before losing any benefits. There
is no income restriction of social security benefits after age 66.
17. In 2017, contributions
to HSA Plans are deductible up to $6,750 for family coverage. If over 55, you can deduct an additional $1,000.
18. There will be an increase in the New Jersey Gross Income Tax exclusion for pension and retirement
income over the next 4 years up to $100,000 on a joint return.
19. The New Jersey sales
tax is reduced from 7% to 6.875% starting January 1, 2017 and to 6.625% starting on January 1, 2018.
Tax Cuts & Jobs Act - 2017
The new tax law called "Tax Cuts & Jobs Act" was recently passed by Congress at the end of 2017. This new
law creates numerous tax saving opportunities for individuals and businesses. Some of the new laws are simple and others
are very complex. I have outlined below the highlights of this recently passed tax legislation.
1. The new law provides for the same number of tax brackets but
with lower rates. The highest tax rate has been reduced from 39.6% to 37%.
2. The personal and dependent
exemptions which were $4,050 each have been eliminated.
3. The child tax credit for those under 17
has been increased from $1,000 to $2,000 per child. The income level at which the credit begins to phase out also increases
allowing more taxpayers to benefit.
4. The standard deduction has increased substantially to $12,000
for single filers and $24,000 for married couples.
5. The deduction for state and local income taxes
and property tax has been limited to $10,000. This will probably cause real estate to decrease in value.
6. The mortgage interest deduction has been limited to those loan balances up to $750,000 for debt incurred after 12/15/17
which is used to buy, build, or improve your primary or secondary home.
7. The interest deduction
on home equity loans has been changed. Interest paid on these loans for money used to buy, build, or improve a taxpayer's
home is still deductible. However, if the money from these loans is used for personal reasons such as paying off credit
card debts or buying a car, it is not deductible. If you convert these loans to a first mortgage then if becomes 100%
8. The threshold for deducting medical expenses has been reduced from 10% to 7.5% of
your adjusted gross income for 2017 & 2018.
9. The following miscellaneous deductions are no
longer deductible in 2018:
a. Unreimbursed business expenses
b. Fees for investment advice
c. Union dues
d. Legal fees related to divorce or producing income
deposit box fees
f. Tax Preparation fees
10. Alimony payments will no longer be deductible by the payer and taxable income to the recipient for
any divorce agreements that were entered into after 12/31/18.
11. The moving expense deduction
has been eliminated for everybody except military personnel.
12. The investment income of a child
known as the "Kiddie Rate" will be taxed at trust income tax rates which are higher than the old income tax rates.
13. In 2018 the 529 Plans can now be used for private or religious school tuition grades K-12, in addition
14. The new law increases the estate tax exclusion to $11.2 million per couple or $5.6 million
for individuals. Therefore, fewer estates will be subject to taxation.
15. The gift tax exclusion
is $15,000 per year per donee in 2018.
16. The Alternative Minimum Tax (AMT) has not been repealed
but they have increased the exemptions which mean less people will be subject to it in 2018.
The individual mandate to purchase health insurance under Obamacare has been repealed for 2019.