It’s extremely hard to fathom tax season is almost here, and the hottest tax topics for 2017 are now in the conversation. Whether you operate a small business or you’re an individual, it’s always important to take advantage of the tax benefits available to you. It’s even more important for you to accurately pay Uncle Sam what’s due.
The following hottest tax topics for 2017 address some of the most talked about tax planning trends and concerns for this tax season. Continue reading to learn more about the hottest tax topics for 2017.
Hottest Tax Topics for 2017 about Retirement
Each year, the IRS announces the latest contribution limits for retirement savings accounts, such as 401(k)s, 403(b)s, and IRAs. For 2017, some of the limits have changed, while other limits have remained the same.
The annual IRA contribution limit stays the same at $5,500, and the contribution limit for catching up for people 50 and over stays at $6,000. However, in 2018 you’ll be able to contribute $18,500 in pre-tax dollars to defined contribution plans like 401(k)s, most 457s, 403(b)s, and the federal Thrift Savings Plan. This is an increase from the previous $18,000. The catch-up contribution limit for people 50 and older will stay at $6,000.
Annual Gift Exclusions
Every so often, Uncle Sam alters the annual exclusion for gifts you’re allowed to give without filing a tax return for gifts. If you gave over $14,000 in gifts, property, or cash to anyone, you need to report the gift on Form 709. However, if you’re married, you are allowed to give a total of $28,000 without filing. The annual exclusion for gifts will increase by $1,000 to $15,000 in 2018.
It’s important to understand this gifting rule applies to the person giving the gift. However, if you are the individual receiving the gift, you’re not required to do anything. That is…unless you’re receiving a gift from someone outside of the U.S. If you do receive a gift that is more than $100,000 from a non-U.S. person, you are required to report your gift on the IRS Form 3520.
Do You Have Foreign Accounts?
Do you have a foreign bank account? Do all of your accounts total to more than $10k? If you answered yes to both questions, you’ll need to file a foreign bank account reporting form or FBAR.
The new name is FinCEN Report 114, and “FinCEN” is an acronym for Financial Crimes Enforcement Network. Based on the sheer fact that “crime” is in its name, you should be highly motivated to ensure you’re in compliance. If you’re not, the penalties are exceptionally high for failing to report your foreign assets.
In addition, you’ll need to file the IRS Form 8938 — Statement of Specified Foreign Financial Assets — if you keep very high balances in your foreign accounts. Also, if you meet certain thresholds in any foreign partnerships or corporations or if you’re designated as a beneficiary on a foreign trust, you should be aware of the complex reporting. A few of the most important forms include — but are not limited to:
- Form 8621
- Form 3520
- Form 5471
School Is In Session
Did you, your spouse, or your dependents have any higher education costs this year? If so, there may be a few different ways you can earn tax savings. The difficult part is determining which one is the best for your unique situation. Essentially, there are three different benefits:
- The American opportunity tax credit (AOTC) is for eligible educational expenses paid for a qualified student within their initial four years of college. This tax credit may make you eligible for a maximum yearly credit of $2,500 per qualifying student.
- The Lifetime Learning Credit offers up to $2,000 a year to cover tuition and other related expenses at a qualifying educational institution for you, dependents, and your spouse.
- The Tuition and Fees Deduction may significantly lower your overall taxable income by up to $4,000.
While there are several requirements that may restrict you from receiving these benefits, the IRS offers the Interactive Tax Assistant Tool to help you navigate your way through the maze. Another way to figure out the best deduction to take for your education expenses is to work with an experienced CPA or tax accountant. In either case, you should receive the Tuition Statement Form 1098-T from the educational facility with everything you’ll need to complete Form 8863, Education Credits.
Contact John F. Dennehy Jr. CPA for Expert Tax Planning
Whether you’re a small business owner looking to maximize Section 179 deductions or you’re looking to ensure your individual tax filings are accurate, the experts at John F. Dennehy can help. We’re a team of experienced team of Certified Public Accountants that offer a wide range of services, including:
Ensure your taxes are in order with the experienced professionals at John F. Dennehy Jr. CPA, PC. Contact us today.