New Tax Deductions for 2016, 2017
Most people don’t realize that certain tax deductions are periodically adjusted. These changes are made for any number of reasons, including shifting inflation figures, changes in legislation, and necessary adjustments made by the federal bank.
While the changes may seem inconsequential, private claimants and businesses alike can benefit from a thorough knowledge of these new tax deductions. In tough financial times, every little bit of savings counts, after all.
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Over 50 New Tax Deductions and Rules
2016 saw over 50 changes to the way tax law is applied via tax rate schedules and other rules that are applied to tax returns. Although the full list of changes is available to the public, here’s a list of the most relevant to the average taxpayer.
- If you earn more than $415,050 per year as an individual, or $466,950 if you’re filing as a married couple, you must pay 39.6% tax. Refer to the full list of changes for tax bracket deductions.
- The standard tax deduction that can be claimed by the head of a household has been raised by $50, moving from $9,250 to $9,300. There was no change to the amount for individuals or married couples filing for the same tax benefit.
- Those earning more than $259,400 (or $311,300 as a couple) can expect to face limited itemized deductions
- Tax exemption is up to $4,050 provided you earn less than $381,900 as a single claimant or $433,800 as a married couple. Remember, this benefit is tapered per your income.
- The Alternative Minimum Tax exemption is set at $53,900.
- If you have more than 3 children who meet the criteria, you could qualify for a credit of $6,242, thanks to the Earned Income Credit.
- Your transport benefits have changed too. The monthly transport claim is capped at $130, while the parking limit is set at $255 for certain parking locations.
- Important changes have been made to the way your medical savings are taxed. It’s best to read the full summary, but essentially anywhere between $2,250 and $3,350 of your medical savings is deductible. The limits for similar plans applied to families remains between $4,450 and $6,700. If you made payments from your own pocket, you can claim a medical deduction of up to $8,150.
- Filing for a Lifetime Learning Credit? The gross income amount required by joint filers is up to $111,000.
- If you are applying for exemption on foreign-earned income, be aware that the exclusion is set at $101,300, which is up $500.
- Lastly, deceased estates are covered by a basic exclusion amount of $5,450,000.
Although some of the new tax law changes may seem to be insignificant, you could save a substantial amount on your next tax return by applying these updated rules and regulations accordingly. Keep in mind that these types of changes tend to happen on an annual basis, so make sure you stay on top of amendments to maximize your benefits.
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