Potential Tax Changes for Individuals in 2017
As
of 12/31/2016, there are certain tax provisions set to expire. Some of the expiring provisions that will
affect the average individual taxpayer are:
·
Credit for certain nonbusiness energy
property
·
Credit for residential energy property
·
Discharge of indebtedness on principal
residence excluded from gross income of individuals
·
Premiums for mortgage insurance deductible as
interest that is qualified residence interest
According
to most sources, President-elect Trump is likely to pursue the following individual
tax legislation in 2017:
·
Reduce the individual marginal tax rate to
three rates: 12, 25, 33% (2016 tax rates are 10, 15, 25, 28, 33, 35, 39.6%)
·
Top tax rate on capital gains and dividends
20%
·
Increase the standard deduction to $15,000
for singles and $30,000 for joint filers (2016 standard deduction is $12,600
for MFJ and QW, $9,300 for HOH and $6,300 for S)
·
Eliminate the deduction for personal
exemptions (2016 personal exemption amount is $4,050 for the taxpayer, spouse
and each qualified dependent, subject to limitation)
·
Eliminate the Head of Household filing status
·
Repeal and replace the Affordable Care Act
(Eliminating the 3.8% tax on net investment income, the additional 0.9%
Medicare tax on wages and SE income, penalties for failure to obtain health
insurance and the premium assistance credit.)
·
Create a new above-the-line deduction for
child and dependent care expenses
·
Increase the earned income credit for working
parents through a spending rebate
·
The creation of Dependent CARE Savings
Accounts with individual contributions matched 50% by government contributions
·
Impose a cap on the amount of itemized
deductions that could be claimed on a tax return at $100,000 for single filers
and $200,000 for joint filers
·
Eliminate the Alternative Minimum Tax
Sandra
G. Johnson, CPA, EA, CFE
January
2, 2017
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