Beware These 5 Important Tax Changes for 2017
From Wise Bread
March 20, 2017 - 6:00am
The U.S. tax code is constantly evolving. This means that each new year brings a slew of changes that taxpayers need to remember when filing their taxes.
What changes to the tax code took place last year, and how will they impact your federal taxes this year? Tax and financial experts say that the 2016 changes were relatively minor. But that doesn't mean that they won't have an impact on the amount of tax dollars you send to Uncle Sam this year.
Here is a look at five of the most important tax changes from last year, and what they'll mean to you as you file your taxes this April.
1. Standard deductions
The standard deduction for heads of households rose to $9,300 for the 2016 tax year, which was $50 more than in 2015. This amount was raised again for the 2017 tax year (which you'll pay in '18), bringing it up to $9,350.
Other standard deductions remained the same for the 2016 tax year: $6,300 for singles and married taxpayers filing separate returns and $12,600 for married couples filing jointly. For the 2017 tax year, both these numbers will increase again to $6,350 and $12,700, respectively.
2. Extra scrutiny for Earned Income Tax Credit, Additional Child Tax Credit
Dave Du Val, chief advocacy officer at TaxAudit.com, said that the returns of those taxpayers who claim the Earned Income Tax Credit or the Additional Child Tax Credit might receive more scrutiny in 2017. According to new federal law, tax preparers are required to complete several steps — or due diligence — when working with the returns of taxpayers who claim both of these credits.
The Earned Income Tax Credit is a refundable tax credit for working taxpayers with low to moderate incomes, and is designed to provide these filers some financial relief at tax time. The Additional Child Tax Credit is also designed for filers earning low incomes. These filers might receive a tax credit under this provision if their original child tax credit is more than the total amount of income taxes they owe.
Congress doesn't want filers to abuse these credits, Du Val said.
"What this means is that taxpayers who claim these credits inappropriately can lose the ability to claim them for years," Du Val said. "Also, those who use a professional tax preparer who follows the letter of the law might find themselves required to answer mo
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