2017 Year-End Planning: Form 1040 Update

Posted by Amy Henretty, CPA
It’s that time of year when individual tax planning for the current year is key. When reviewing your 2017 year for tax planning, it is important to know the changes and updates to Form 1040 that could have an impact on the amount you pay in taxes. It is important to note that these items are subject to change if new tax laws go into effect prior to the end of 2017.

In a review of the IRS draft 2017 Form 1040, the following line items have been changed or updated from the prior year.

Line 21, Other income – Prior to January 1, 2017, this line included a provision for the exclusion from gross income for “qualified principal residence indebtedness.” In 2017, the discharge of this indebtedness will no longer be excluded from gross income.

Line 26, Moving expenses – The 2017 standard mileage rate for moving expenses is 17 cents per mile.

Line 32, IRA deduction – For 2017, the annual deductible cash contribution to an IRA statutory dollar limit is $5,500, plus an additional $1,000 for individuals age 50 and older. There is a phase-out of the deduction if over the specified dollar range of modified adjusted gross income (MAGI).

Line 34, Reserved for future use – This line was previously for a tuition and fees deduction which expired in 2016.

Line 40, Itemized deductions or standard deduction – For 2017, the standard deduction is $6,350 for single filers and married filing separately, $12,700 for married filing jointly and qualifying widow(er), and $9,350 for head of household.

Line 42, Exemptions – For 2017, the exemption amount for each qualifying exemption claimed is $4,050. The deduction for exemptions is reduced if AGI’s are in excess of the following amounts: $313,800 for married filing jointly or qualifying widow(er), $287,650 for head of household, $261,500 for single filers, and $156,900 for married filing separately.

Line 45, Alternative minimum tax – The AMT exemption for 2017 is $54,300 for single filers, $84,500 for married filing jointly or qualifying widow(er), and $42,250 for married filing separately.

Line 53, Residential energy credit – The residential energy credit provision expired in 2016.

Line 57, Self-employment tax – Self-employment income subject to FICA tax is a maximum of $127,200 and there is no ceiling on Medicare wage base.

Line 61, Health care: individual responsibility – On this line, the taxpayer must do one of the following: indicate heath care coverage for all twelve months in 2017; claim an exemption from the heath care coverage requirement for some or all of 2017 and attach Form 8965; or make a “shared responsibility payment” if for any month in 2017 the taxpayer did not have coverage and did not qualify for a coverage exemption.

Line 66, Earned income credit (EIC) – If a taxpayer has a qualifying child claimed by another individual, the taxpayer may be able to qualify for the EIC under the rules for taxpayers without a qualifying child.

Line 72, Excess social security and RRTA tax withheld – For 2017, the maximum Social Security tax for 2017 is $7,886.40 for purposes of this credit for excess tax withheld.

When completing year-end planning for the 2017 tax year, be sure to take note of the above changes to Form 1040. In the event of possible tax law changes in the near future make the most of your itemized deductions and exemptions this year since they may disappear with the new law.

For additional information on the above changes or if you need assistance with your year-end tax planning please contact us.

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