1. TurboTax /
  2. Tax Calculators & Tips /
  3. Tax Tips & Videos /
  4. Tax Planning and Checklists /
  5. Tax Changes You Need to Know for 2017

Tax Changes You Need to Know for 2017

Updated for Tax Year 2017


OVERVIEW

Various tax changes inevitably occur from year to year. These can range from minor adjustments to the complete elimination of various tax provisions. The Internal Revenue Service has released information on a number of tax changes for the 2017 tax year.


While much is written about the length and complexity of the U.S. Tax Code, the fact is that much of it doesn't apply to the average taxpayer. In reality, taxes can be relatively straightforward for many individuals.

However, you should be on the lookout for the various tax changes that inevitably occur from year to year. These can range from minor adjustments to the complete elimination of various tax provisions. The Internal Revenue Service has released information on a number of tax changes for the 2017 tax year. (Don’t worry. When you use TurboTax, you’ll always be up-to-date with the latest tax laws.)

Inflation adjustments

Inflation increases the cost of goods and services for consumers. To ensure that American taxpayers keep pace with the rising costs of inflation, the IRS periodically adjusts the value of certain deductions and exemptions. With rising deductions and exemptions, you get to protect more of your money from becoming taxable income.

For tax year 2017, the IRS increased the value of some different tax benefits, while leaving some the same as last year:

  • Personal and dependent exemptions remain $4,050
  • The standard deduction rises to $6,350 for single, $9,350 for head of household, and $12,700 for married filing jointly
  • The maximum earned income tax credit rises to $6,318
  • The maximum income limit for the EITC rises to $53,930
  • The foreign earned income deduction rises to $102,100
  • Annual deductible amounts for Health Savings Accounts increases for individuals to $3,400 but with no change for families
  • The estate and gift tax exclusion rises to $5.49million

According to Jeff Gonzalez, a CPA and the CFO of Los Angeles-based Electric Entertainment, "Inflation adjustments can be a big thing. They don't come every year, but when they do, they translate into additional money in your pocket."

New foreign financial disclosures

One of the latest tax buzzwords is "offshore accounts," as the IRS has begun taking a closer look at the foreign holdings of American citizens. During the transitional tax year of 2011, only certain taxpayers had to make foreign disclosures to the IRS. As of 2012 and beyond, all taxpayers who meet the minimum threshold, which varies by tax-filing and residence status, must comply.

"If your overseas assets don't exceed $50,000, you don't have to worry about the new rules," says Gonzalez. "Above that amount, check the IRS reporting limits, which may change from year to year in the future."

For U.S. residents, you have to file information about your foreign holdings if they exceed $50,000 at year-end, if you're a single filer. Foreign holdings exceeding $75,000 at any time during the year must also be reported. For joint filers, the limits rise to $150,000 at any time, and $75,000 at year-end.

For U.S. citizens living abroad, the reporting limits rise dramatically. Single filers need only report accounts exceeding $200,000 at year-end, or $300,000 at any point during the year. For joint filers, the limits are $400,000 at year-end, or $600,000 at any time during the year.

The above requirements for filing Form 8938 do not take the place of the obligation to file an FBAR (Foreign Bank Account Report, Treasury Form TD F 90-22.1) to report a financial interest in or signature authority over a foreign financial account.

Tax increases

2017 continues with the following tax increases started in 2013:

  • An additional tax bracket has been added for individuals with taxable income greater than $400,000 and joint filers with taxable income over $450,000
  • Tax on long-term capital gains is increased from 15 to 20 percent for individuals with taxable income greater than $400,000 and joint filers with taxable income over $450,000
  • 3.8 percent Medicare surtax on the lesser of net investment income or modified adjusted gross income above $200,000 for individuals and $250,000 for joint filers.
  • Additional Medicare payroll tax of 0.9 percent on earned income above $200,000 for individuals and $250,000 for joint filers.

Other changes that will increase taxes

The threshold for unreimbursed medical expenses increased from 7.5 percent to 10 percent of Adjusted Gross Income (AGI) for most taxpayers in 2014. There was a temporary exemption from Jan. 1, 2013 to Dec. 31, 2016 for individuals age 65 and older and their spouses. As of 2017, all taxpayers are subject to the 10percent threshold.

While not labeled as tax increases by the IRS, the following will increase the amount of taxes due on single filers with (AGI) greater than $250,000 and joint filers with AGI greater than $300,000:

  • Personal exemption phaseout - for every $2,500 of AGI above these income limits, the $4,050 (2017) per-person personal exemption will be reduced by 2%. Personal exemption will be fully phased out for individuals with AGI greater than $384,000 and joint filers with AGI greater than $436,300.
  • Itemized deduction phaseout - reduces itemized deductions by 3% of the AGI above the limits (for 2017, that threshold is $313,800 for married couples filing jointly and $287,650 for single filers) to a maximum reduction of 80%.

Get every deduction you deserve

TurboTax Deluxe searches more than 350 tax deductions and credits so you get your maximum refund, guaranteed.

For only $54.99*
Sign In

Looking for more information?

The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.


Security is built into everything we do
Here's how
* Important Offer Details and Disclosures
  • TURBOTAX ONLINE/MOBILE

  • Try for Free/Pay When You File: TurboTax online and mobile pricing is based on your tax situation and varies by product. Absolute Zero $0 federal (1040EZ/1040A) + $0 state offer only available with TurboTax Federal Free Edition; offer may change or end at any time without notice. Actual prices are determined at the time of print or e-file and are subject to change without notice. Savings and price comparisons based on anticipated price increase expected in March. Special discount offers may not be valid for mobile in-app purchases.
  • QuickBooks Self-Employed Offer with TurboTax Self-Employed: File your 2016 TurboTax Self-Employed return between 4/19/17 and 10/16/17 to receive your complimentary subscription to QuickBooks Self-Employed until 10/31/18. Activation by 12/31/17 required. Sign in to QuickBooks Self-Employed via mobile app or at https://selfemployed.intuit.com/turbotax; e-mail address used for activation and sign-in. Offer valid only for new QuickBooks Self-Employed customers. See QuickBooks.com for price comparison.
    • When you use TurboTax Self-Employed to file your 2017 taxes, you will have the option to renew your QuickBooks Self-Employed subscription. If you do not purchase TurboTax Self-Employed by 10/15/18, you will have the option of renewing your QuickBooks Self-Employed subscription by 10/31/18 for another year at the then-current annual subscription rate. You may cancel your subscription at any time from within the QuickBooks Self-Employed billing section.
  • Pays for itself (TurboTax Self-Employed): Estimates based on deductible business expenses calculated at the self-employment tax income rate (15%) for tax year 2016. Actual results will vary based on your tax situation.
  • Anytime, anywhere: Internet access required; standard message and data rates apply to download and use mobile app.
  • Fastest refund possible: Fastest tax refund with e-file and direct deposit; tax refund time frames will vary.
  • Pay for TurboTax out of your federal refund: $X.XX Refund Processing Service fee applies to this payment method. Prices are subject to change without notice.
  • TurboTax Expert Help, Tax Advice and SmartLook: Included with Deluxe, Premier and Self-Employed (via phone or on-screen); not included with Federal Free Edition (but available for purchase with the Plus bundle). SmartLook on-screen help is available on a PC, laptop or the TurboTax mobile app. TurboTax experts provide general advice, customer service and product help; tax advice provided only by credentialed CPAs, enrolled agents and tax attorneys. Feature availability varies by device. State tax advice is free. Service, area of expertise, experience levels, hours of operation and availability vary, and are subject to restriction and change without notice.
  • Tax Return Access, My Docs and My Analysis & Advice features: Access to all tax-related documents we have on file for you is available until you file your 2017 tax return or through 10/31/2018, whichever comes first. Terms and conditions may vary and are subject to change without notice.
  • #1 best-selling tax software: Based on aggregated sales data for all tax year 2015 TurboTax products.
  • Most Popular: TurboTax Deluxe is our most popular product among TurboTax Online users with more complex tax situations.
  • CompleteCheck: Covered under the TurboTax accurate calculations and maximum refund guarantees.
  • #1 rated online tax prep provider: Based on independent comparison of the best online tax software by TopTenReviews.com March 13, 2017.
  • TURBOTAX CD/DOWNLOAD SOFTWARE

  • TurboTax CD/Download products: Price includes tax preparation and printing of federal tax returns and free federal e-file of up to 5 federal tax returns. Additional fees apply for e-filing state returns. E-file fees do not apply to New York state returns. Savings and price comparison based on anticipated price increase expected in March. Prices subject to change without notice.
  • Fastest refund possible: Fastest tax refund with e-file and direct deposit; tax refund time frames will vary.
  • Pay for TurboTax out of your federal refund: $X.XX Refund Processing Service fee applies to this payment method. Prices are subject to change without notice. This benefit is available with TurboTax Federal products except TurboTax Business.
  • About our TurboTax Product Experts: Customer service and product support vary by time of year.
  • About our credentialed tax experts: Live tax advice via phone is included with Premier and Home & Business; fees apply for Basic and Deluxe customers. State tax advice is free. Service, experience levels, hours of operation and availability vary, and are subject to restriction and change without notice. Not available for TurboTax Business customers.
  • #1 best-selling tax software: Based on aggregated sales data for all tax year 2016 TurboTax products.
  • Data Import: Imports financial data from participating companies; may require a free Intuit online account. Quicken and QuickBooks import not available with TurboTax installed on a Mac. Imports from Quicken (2016 and higher) and QuickBooks Desktop (2012 and higher); both Windows only. Quicken import not available for TurboTax Business. Quicken products provided by Quicken Inc., Quicken import subject to change.