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Useful Income Tax and Retirement Planning Information

Useful Income Tax and Retirement Planning Information

There have been several major tax law changes over the past few years with staggered effective dates. These laws have significantly changed the way you may want to consider your financial situation, especially retirement planning. Here is some information that you find helpful:

The Income Tax Rates for 2017

2017 Single Return Rate Schedule

2017 Married Filing Jointly Rate Schedule

Taxable income levels

Tax rate

Taxable income levels

Tax rate

0 to $9,325

10%

0 to $18,650

10%

$9,326 to $37,950

15%

$18,651 to $75,900

15%

$37,951 to $91,900

25%

$75,901 to $153,100

25%

$91,901 to $191,650

28%

$153,101 to $233,350

28%

$191,651 to $416,700

33%

$233,351 to $416,700

33%

$416,701 to $418,400

35%

$416,701 to $470,700

35%

Over $418,400
39.6%
Over $470,700
39.6%

 

2017 Standard Deduction
Married couples filing a joint return - $12,700
Single return filers - $6,350

 

2017 Personal Exemption Amounts
$4,050

2017 Taxation of Dividends and Long Term Capital Gains

For taxpayers in the 10% and 15% brackets, qualifying dividends and long term capital gains (assets held for more than a year) will be taxed at 0%. For those in 25%, 28%, 33% and 35% tax brackets, the tax rate on dividends and long term capital gains is 15%. For those in the top 39.6% bracket, the tax rate is 20%.

2017 Medicare Surtaxes

As part of the health care reform enacted in 2010, additional Medicare surtaxes began in 2013 for high income wage earners and high income investors. The surtaxes apply when a single taxpayer's Modified Adjusted Gross Income (MAGI) exceeds a threshold of $200,000 or joint return filers when their MAGI exceed $250,000.

  • For wage earners, an additional 0.9% Medicare surtax applies to wages (including bonuses and self-employment income) above the threshold amounts.
  • For investors, an additional 3.8% Medicare surtax applies to net investment income (taxable interest, dividends, capital gains, etc.) in excess of the thresholds.

Estate Taxes

Year

Estate Size Where Taxation Starts

Top estate tax rate

2017
$5,490,000
40%

2018

Indexed for inflation

40%

Regular IRA and Roth IRA Contribution Limits

For tax year

IRA contribution limit

Additional contribution limits for those age 50 and over

2017

$5,500

$1,000

401(k) Retirement Plan Contribution Limits

For tax year

401(k) deferral limit

Additional contribution limits for those age 50 and over

2017
$18,000
$6,000

Coverdell Education Savings Accounts (Education IRAs)

For 2017, the annual contribution limit is $2000 with eligibility phase out beginning at $190,000 (for married filing jointly) and $95,000 of Adjusted Gross Income (some modifications apply).

Annual Gift Tax Exclusion

For 2017, gifts of $14,000 and under are not subject to gift tax.

2017 Payroll Taxes - Social Security and Medicare

  • Employee wages subject to Social Security tax of 6.2% - $127,200.
  • Employee wages subject to Medicare tax of 1.45% on all wages and an additional 0.9% on wages above $200,000 for taxpayers filing single returns. For taxpayers filing joint returns, the additional 0.9% applies to wages above $250,000.
  • Self employment income subject to Social Security tax of 12.4% - $127,200.
  • Self employment income subject to Medicare tax of 2.9% on all self employment income and an additional 0.9% on wages above $200,000 for taxpayers filing single returns. For taxpayers filing joint returns, the additional 0.9% applies to wages above $250,000.
  • Notes - The 0.9% additional Medicare tax was part of the health care reform bill and only applies to the employee portion. Employers do not match the additional Medicare tax.

2017 Social Security Benefits

2017 Average monthly benefit for all retired workers - $1,360.

2017 Average monthly benefit for retired couples - $2,260.

2017 Maximum monthly benefit for a worker at full retirement age - $2,687.

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