Tax deductions for 2017 have significant changes for the Internal Revenue Service and its implementation of adjustments. It’s good news for everyone, as these revisions actually benefit the taxpayers. Here’s a guide for tax rates on specific deductions come tax season.
Tax Deductions 2017 | Changes and Adjustments
1. Single Taxpayers Standard Deduction
An increase of $50 from $6,300 in the year 2016 to $6,350 in 2017 is the adjustment on a standard deduction for taxpayers who are single. This also applies to married couples filing their taxes separately this year.
2. Standard Deduction for Joint Filing
A joint filing by married couples has generally lower tax rates compared to a separate filing. The standard deduction in 2016 for joint filing of married couples was $12,600. For 2017, the IRS had an increase of $100, thus, the standard deduction for joint filing of married couples is $12,700.
An adjustment increase of $50 on the standard deduction of heads of households is done by the IRS in the 2017 tax year. There’s a change from $9,300 to $9,350.
3. Aged or Blind Standard Deduction
There’s an increase in the standard deduction for the blind and aged for 2017. It becomes $1,250 as opposed to the $1,200 back in the year 2016. Moreover, if the taxpayer is single or a surviving spouse, there’s an increase of $1,550 for the individual’s standard deduction.
4. Student Loan Interest Deduction
The maximum tax deduction a taxpayer can declare for student loan interest is still the same at $2,500. For individuals with modified adjusted gross income, phaseouts are in effect. An excess of $65,000 in modified adjusted gross income or joint returns of $135,000 has phaseouts. Furthermore, individuals having $80,000 or more in modified adjusted gross income as well as joint returns of $165,000 or more are entirely phased out.
5. Foreign-Earned Income Exclusion
This is for overseas Americans living and working outside of the U.S. There are three things an individual needs to do in order to qualify. First is by filing a tax return, second is by living and working abroad or outside the country, and third is for the individual to be in a foreign country for 330 days in any 365 day period. The 2017 tax year allows $102,100 for foreign-earned income exclusion.
6. Health Savings Accounts
HSA (Health Savings Accounts) allows individuals to pay for out of pocket health care expenses. Tax deduction examples are medical, dental, vision, and other health expenses normally paid with post-tax money. This can be used to pay for any eligible medical expense for the taxpayer, his spouse, or the eligible dependents.
Members having self-only coverage can have a yearly deduction of an amount not less than $2,250 but it can’t exceed $3,350. On the other hand, a yearly deduction of not less than $4,500 but not exceeding $6,700 applies to members with family coverage.
7. Parking and Transportation Benefits
There are extra tax breaks for commuters who take mass transit. Shave up to a thousand dollars off annual commuting costs. For the 2017 tax year, any transit pass or highway vehicle has a monthly limit of $255 in transportation benefit.
Watch this video by The Wolf Group about foreign-earned income exclusion:
The increased tax deductions for 2017 will definitely be something to look forward to. Not everyone may be aware of this, so it will pay for you to share your knowledge on the new tax deductions. Being aware of these changes in the IRS surely helps in maximizing tax returns. Make sure to keep all those documents and receipts before filing for the 2017 tax year.
Did this list of changes and adjustments in the IRS help with your tax filing? Share your thoughts in the comments section below!