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2016 Mileage Rates
- Business: 54 cents per mile (down from 57.5 cents in 2015) - Medical or Moving: 19 cents per mile (down from 23 cents in 2015) - Charitable: 14 cents per mile | |
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Beware of Tax Scams!
The IRS has issued a new warning against thieves who may contact people on the phone or via email or a letter and try to trick them into divulging personal financial information, such as their Social Security or bank account numbers, or even turning over some of their hard-earned cash. And the scams can be tough to spot. Potential victims may see a fake caller ID that identifies the call as coming from the IRS or receive mail or email that appears to have the IRS letterhead. The scammers typically try to intimidate victims into acting quickly-by, say, sending a payment to what they claim is an IRS address-by threatening arrest or some other consequence.
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Did you move or
change your email address in 2016?
Call or email the office and let us know!
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September 2016 Newsletter
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Greetings!
Hope you have been having a good year. Thankfully the summer heat is abating and soon cooler fall temperatures will be here.
There is not a lot in the way of new tax developments at present. Kevin Brady, our representative and chair of the House Ways and Means committee, has put forth several proposals including significant simplification of the tax code; none has been adopted thus far, but we are watching for developments. We think the information below may help you when you are considering your taxes. If you have any questions, please do not hesitate to call our office.
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Income Tax Breakdown
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Where do you rank as a taxpayer? Ever wonder how your income stacks up against your fellow taxpayers? The following table provides a breakdown of income and income taxes paid by category for 2013, as reported on 2013 federal income tax returns (the most current year on file for these statistics).
Top 1%:AGI over $429K (19% of all income); 37.8% all tax paid.
Top 5%:AGI over $180K (34.4% of all income); 58.6% all tax paid.
Top 10%:AGI over $128K (45.9% of all income); 69.8% all tax paid.
Top 25%:AGI over $75K (68.1% of all income); 86.3% all tax paid.
Top 50%:AGI over $37K (88.5% of all income); 97.2% all tax paid.
Bottom 50%:AGI under $37K (11.5% of all income); 2.8% all tax paid.
The income figures above are Adjusted Gross Income or AGI, which is the amount reported at the bottom of page one of the Form 1040. It is important to note that it excludes tax-exempt interest and dividends, all or part of Social Security benefits (up to 85% is taxable), and in many cases, distributions from mid-stream Master Limited Partnerships. |
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Child and Dependent Care
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If you have a Flexible Spending Account (FSA) through your employer, you can still claim the dependent care credit to the extent your expenses are more than the amount that you pay through the FSA. The maximum amount of dependent care costs you can fund through an FSA is $5,000. But the credit applies to as much as $6,000 of expenses for filers with two or more kids under the age of 13. In that case , you'd run the first $5,000 of costs through the FSA, and the next $1,000 would be eligible for the tax credit. The tax credit is available to all income levels, though it is reduced with increasing income.
Remember that summer day camp costs qualify for the dependent care credit. But the costs of summer school and tutoring programs aren't eligible for the credit, nor are overnight camps. The child must be under 13, and expenses must be incurred so the parents can work.
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Medicare Premiums
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Remember that Medicare premiums may increase with higher income levels. In a June 22, 2016 article the Wall Street Journal reported that the plan trustees projected that premiums would rise by as much as 22% for wealthier beneficiaries of Medicare Part B. Under the Social Security Act's "hold harmless" provision, Medicare can't pass along premium increases greater than what most participants would receive through Social Security's annual cost-of-living adjustment. About 70% of beneficiaries will qualify for hold harmless treatment in 2017.
Instead, Medicare must spread much of the projected increase in its costs across the remaining 30% of beneficiaries and new enrollees.
Your premiums are based on income earned two years ago (e.g., 2016 premiums are based on income earned in 2014 and reported on the 2014 tax return). The income amount is referred to as Modified Adjusted Gross Income (MAGI), which is your Adjusted Gross Income (reported at the bottom of page one of the 1040) plus tax-exempt income.
For 2016, the base or lowest Part B premium was $121.80. This applied to MAGI up to $85,000 for single taxpayers or $170,000 for joint filers. Above these income levels, the premium jumped from $170.50 to as much as $389.50. Where you can, control your income such that you don't pay higher premiums. For example, you can control capital gains from elective stock sales. Also, if you're over 70, consider charitable contributions directly from your IRA (up to $100,000), which satisfies the RMD but does not add to MAGI.
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HSA (Health Savings Account) Limits for 2017
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The 2017 HSA contribution limit (both employer and employee) is increased for self-only plans to $3,400, up $50 from 2016. The family plan amount remains unchanged at $6,750. The HSA catch-up contribution for participants age 55 or older on or before December 31 remains $1,000.
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As always, we are honored to handle your tax and accounting matters. Thank you for your business!
Sincerely,
Doris Cloud and Paul Cloud
This newsletter is for general guidance only, and does not constitute tax advice or professional consulting. Before any action, consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information.
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