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Tax Info

2017 Standard Mileage Rates for Business, Medical and Moving Announced

IR-2016-169, Dec.13, 2016

WASHINGTON — The Internal Revenue Service today issued the 2017 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2017, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 53.5 cents per mile for business miles driven, down from 54 cents for 2016
  • 17 cents per mile driven for medical or moving purposes, down from 19 cents for 2016
  • 14 cents per mile driven in service of charitable organizations

The business mileage rate decreased half a cent per mile and the medical and moving expense rates each dropped 2 cents per mile from 2016. The charitable rate is set by statute and remains unchanged.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.


Plan Type 2017
IRA
IRA Contribution Limit 5,500
IRA Catch-Up Contributions 1,000
IRA AGI Deduction Phase-out Starting at
Joint Return 99,000
Single or Head of Household 62,000

SEP
SEP Minimum Compensation 600
SEP Maximum Contribution 54,000
SEP Maximum Compensation 270,000

SIMPLE Plans
SIMPLE Maximum Contributions 12,500
Catch-up Contributions 3,000

401(k), 403(b), Profit-Sharing Plans, etc.
Annual Compensation 270,000
Elective Deferrals 18,000
Catch-up Contributions 6,000
Defined Contribution Limits 54,000


2016 Standard Mileage Rates for Business, Medical and Moving Announced

IR-2015-137, Dec.17, 2015

WASHINGTON — The Internal Revenue Service today issued the 2016 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2016, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 54 cents per mile for business miles driven, down from 57.5 cents for 2015
  • 19 cents per mile driven for medical or moving purposes, down from 23 cents for 2015
  • 14 cents per mile driven in service of charitable organizations

The business mileage rate decreased 3.5 cents per mile and the medical, and moving expense rates decrease 4 cents per mile from the 2015 rates. The charitable rate is based on statute.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

These and other requirements for a taxpayer to use a standard mileage rate to calculate the amount of a deductible business, moving, medical or charitable expense are in Rev. Proc. 2010-51.  Notice 2016-01 contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.


2016 Pension and Retirement Plan Limits and

2016 Social Security Adjustments


 

2015

2016

Defined benefit plan annual limit

$210,000

$210,000

Defined contribution plan annual limit

$53,000

$53,000

Elective deferral limit for purposes of cash or deferred arrangements (401(k) plans) and tax-sheltered annuities (403(b) plans)

 

$18,000

 

$18,000

Maximum deferral limit for 457 plans

$18,000

$18,000

>Age 50 Catch-up Contribution Limit to 401(k), 403(b) or 457(b) Plans

$6,000

$6,000

Maximum deferral limit for SIMPLE plans

$12,500

$12,500

>Age 50 Catch-up Contribution Limit to SIMPLE Plans

$3,000

$3,000

Minimum compensation considered in determining eligibility for a SEP

$600

$600

Threshold for Highly Compensated Employee (HCE)

$120,000

$120,000

Key Employee Compensation Limit for Top Heavy Plan Purposes

 $170,000

$170,000

Annual Compensation Limit

 

$265,000

$265,000








2016 Payroll Tax Rates and Limits Changes

2015 2016
Social Security Wage Limit $118,500 $118,500
Federal Unemployment Tax (FUTA) Wage Limit $7,000 $7,000
Retirement Contribution Limit Changes:
401(k)/SEP/403(b)/457 Deferrals $18,000 $18,000
Qualified Plan/403(b)/457 Catch-up Contributions $6,000 $6,000
SIMPLE IRA $12,500 $12,500
SIMPLE IRA Catch-up Contributions $3,000 $3,000

Estimated Income Tax Brackets and Rates

In 2016, the income limits for all brackets and all filers will be adjusted for inflation and will be as follows (Table 1). The top marginal income tax rate of 39.6 percent will hit taxpayers with adjusted gross income of $415,050 and higher for single filers and $466,950 and higher for married filers.

Table 1. 2016 Taxable Income Brackets and Rates (Estimate)

Rate

Single Filers

Married Joint Filers

Head of Household Filers

10%

$0 to $9,275

$0 to $18,550

$0 to $13,250

15%

$9,275 to $37,650

$18,550 to $75,300

$13,250 to $50,400

25%

$37,650 to $91,150

$75,300 to $151,900

$50,400 to $130,150

28%

$91,150 to $190,150

$151,900 to $231,450

$130,150 to $210,800

33%

$190,150 to $413,350

$231,450 to $413,350

$210,800 to $413,350

35%

$413,350 to $415,050

$413,350 to $466,950

$413,350 to $441,000

39.6%

$415,050+

$466,950+

$441,000+

Standard Deduction and Personal Exemption

The standard deduction for single and married couples filing jointly will not increase in 2016 (Table 2). For taxpayers filing as head of household, it will increase by $50 from $9,250 to $9,300.

The personal exemption for 2016 will be $4,050.

Table 2. 2016 Standard Deduction and Personal Exemption (Estimate)

Filing Status

Deduction Amount

Single

 $6,300.00

Married Filing Jointly

 $12,600.00

Head of Household

 $9,300.00

For 2016, the additional standard deduction amount for the aged or the blind is $1,250. The additional standard deduction amount is increased to $1,550 if the individual is also unmarried and not a surviving spouse.

2015 Income Tax Brackets

The Federal income tax has 7 tax brackets: 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%. The amount of tax you owe depends on your filing status and income level.

It’s important to realize that moving into a higher tax bracket does not mean that all of your income will be taxed at a higher rate. Instead, only the money that you earn within a particular tax bracket is subject to that particular tax rate.

Single:

Taxable Income Tax Rate
$0 to $9,225 10%
$9,226 to $37,450 $922.50 plus 15% of the amount over $9,225
$37,451 to $90,750 $5,156.25 plus 25% of the amount over $37,450
$90,751 to $189,300 $18,481.25 plus 28% of the amount over $90,750
$189,301 to $411,500 $46,075.25 plus 33% of the amount over $189,300
$411,501 to $413,200 $119,401.25 plus 35% of the amount over $411,500
$413,201 or more $119,996.25 plus 39.6% of the amount over $413,200

 

Married Filing Jointly or Qualifying Widow(er):

Taxable Income Tax Rate
$0 to $18,450 10%
$18,451 to $74,900 $1,845.00 plus 15% of the amount over $18,450
$74,901 to $151,200 $10,312.50 plus 25% of the amount over $74,900
$151,201 to $230,450 $29,387.50 plus 28% of the amount over $151,200
$230,451 to $411,500 $51,577.50 plus 33% of the amount over $230,450
$411,501 to $464,850 $111,324.00 plus 35% of the amount over $411,500
$464,851 or more $129,996.50 plus 39.6% of the amount over $464,850

 

Married Filing Separately:

Taxable Income Tax Rate
$0 to $9,225 10%
$9,226 to $37,450 $922.50 plus 15% of the amount over $9,225
$37,451 to $75,600 $5,156.25 plus 25% of the amount over $37,450
$75,601 to $115,225 $14,693.75 plus 28% of the amount over $75,600
$115,226 to $205,750 $25,788.75 plus 33% of the amount over $115,225
$205,751 to $232,425 $55,662.00 plus 35% of the amount over $205,750
$232,426 or more $64,998.25 plus 39.6% of the amount over $232,425

 

Head of Household:

Taxable Income Tax Rate
$0 to $13,150 10%
$13,151 to $50,200 $1,315.00 plus 15% of the amount over $13,150
$50,201 to $129,600 $6,872.50 plus 25% of the amount over $50,200
$129,601 to $209,850 $26,772.50 plus 28% of the amount over $129,600
$209,851 to $411,500 $49,192.50 plus 33% of the amount over $209,850
$411,501 to $439,000 $115,737.00 plus 35% of the amount over $411,500
$439,001 or more $125,362.00 plus 39.6% of the amount over $439,000

 

2015 Personal Exemption Amounts

You are allowed to claim one personal exemption for yourself and one for your spouse (if married). However, if somebody else can list you as a dependent on their tax return, you are not permitted to claim a personal exemption for yourself.

For tax year 2015, the personal exemption amount is $4,000 (up from $3,950 in 2014).

The personal exemption amount “phases out” for taxpayers with higher incomes. The Personal Exemption Phaseout (PEP) thresholds are as follows:

Filing Status PEP Threshold Starts PEP Threshold Ends
Single $258,250 $380,750
Married Filing Jointly $309,900 $432,400
Married Filing Separately $154,950 $216,200
Head of Hosuehold $284,050 $406,550

2015 Personal Exemption Amounts

You are allowed to claim one personal exemption for yourself and one for your spouse (if married). However, if somebody else can list you as a dependent on their tax return, you are not permitted to claim a personal exemption for yourself.

For tax year 2015, the personal exemption amount is $4,000 (up from $3,950 in 2014).

The personal exemption amount “phases out” for taxpayers with higher incomes. The Personal Exemption Phaseout (PEP) thresholds are as follows:

Filing Status PEP Threshold Starts PEP Threshold Ends
Single $258,250 $380,750
Married Filing Jointly $309,900 $432,400
Married Filing Separately $154,950 $216,200
Head of Hosuehold $284,050 $406,550

 

2015 Standard Deduction Amounts

There are two main types of tax deductions: the standard deduction and itemized deductions. You can claim one type of deduction on your tax return, but not both. For example, if you claim the standard deduction, you cannot itemize deductions – and vice versa (if you itemize deductions, you cannot claim the standard deduction). You are allowed to use whichever type of deduction results in the lowest tax.

The standard deduction is subtracted from your Adjusted Gross Income (AGI), thereby reducing your taxable income. For tax year 2015, the standard deduction amounts are as follows:

Filing Status Standard Deduction
Single $6,300
Married Filing Jointly $12,600
Married Filing Separately $6,300
Head of Household $9,250
Qualifying Widow(er) $12,600

Optional standard mileage rates for use of a vehicle will change a little for 2015, the IRS announced on Wednesday, with the business use rate going up and the medical and moving rate going down (Notice 2014-79). Taxpayers can use the optional standard mileage rates to calculate the deductible costs of operating an automobile.

Beginning on Jan. 1, 2015, the standard mileage rates for the use of a car, van, pickup or panel truck will be:

  • 57.5 cents per mile for business miles driven, up from 56 cents in 2014.

  • 23 cents per mile driven for medical or moving purposes, down half a cent from 2014.

  • 14 cents per mile driven in service of charitable organizations.


Contribution limits for retirement accounts

The IRS has announced the 2015 contribution limits for retirement savings accounts, including contribution limits for 401(k), 403(b), and most 457 plans, as well as income limits for IRA contribution deductibility. Please review an overview of the limits below.


401(k), 403(b), and most 457 plans

 
2014
2015
Age 49 and under
$17,500
$18,000
Age 50 and older
Additional $5,500
Additional $6,000


Roth and Traditional IRA contribution limits

 
2014
2015
Age 49 and under
Up to $5,500 (must have employment compensation)
Up to $5,500 (must have employment compensation)
Age 50 and older
Additional $1,000
Additional $1,000


Traditional IRA modified adjusted gross income limit for partial deductibility

 
2014
2015
Single
$60,000-$70,000
$61,000-$71,000
Married—Filing joint returns
$96,000-$116,000
$98,000-$118,000
Married—Filing separately
$0-$10,000
$0-$10,000
Non-active participant spouse
$181,000-$191,000
$183,000-$193,000


Roth IRA modified adjusted gross income phase-out ranges*

 
2014
2015
Single
$114,000 - $129,000
$116,000 - $131,000
Married—Filing joint returns
$181,000 - $191,000
$183,000 - $193,000
Married—Filing separately
$0-$10,000
$0-$10,000
* As of 2010, there is no income limit for taxpayers who wish to convert a traditional IRA to a Roth IRA.

Total Amount of IRS Audits on Individual Tax Returns

 
FY 2009
FY 2010
FY 2011
Total Returns Filed Prior CY
138,949,670
142,823,105
140,837,499
Total Audits Conducted
1,425,888
1,581,394
1,564,690
Percentage Audited
1.03%
1.11%
1.11%

 IRS Audit Rates by Income Level for Individuals (2009)

 
Percentage of Total Returns Filed
Percentage of Returns Audited
No adjusted gross income
2.13%
2.15%
$1 - $24,999
40.51%
0.90%
$25,000-$49,999
24.31%
0.72%
$50,000-$74,999
13.44%
0.69%
$75,000-$99,999
7.99%
0.69%
$100,000-$199,999
8.69%
0.98%
$200,000-$499,999
2.25%
1.92%
$500,000-$999,999
0.43%
2.98%
$1,000,000-$4,999,999
0.23%
4.02%
$5,000,000-$9,999,999
0.02%
6.47%
$10,000,000+
0.01%
9.77%

 IRS Recent Audit Rates/Statistics by Tax Filing Type FY 2011

 
Returns Filed (Prior Calendar Year)
Returns Audited
Percentage Audited
Small Corporation
1,931,008
19,697
1.02%
Large Corporation
59,291
10,459
17.64%
Subchapter S
4,444,154
18,519
0.42%
Partnership
3,434,905
13,770
0.40%
Individual
140,837,499
1,564,690
1.11%



For 2014 - Returns Due 04/15/2015

IRS Mileage Rates.  Beginning on Jan. 1, 2014, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 56 cents per mile for business miles driven
  • 23.5 cents per mile driven for medical or moving purposes
  • 14 cents per mile driven in service of charitable organizations

Itemized Deductions. The limitation for itemized deductions – the Pease limitations, named after former Rep. Don Pease (D-OH) – claimed on individual returns for tax year 2014 will begin with incomes of $254,200 or more ($305,050 for married couples filing jointly). The Pease limitations were slated to be reduced beginning in 2006 and eliminated in 2010; as with the other tax cuts, the elimination was extended through the end of 2012. The limitations were brought back in 2013 at the original thresholds, indexed for inflation. The result of those changes is basically an increase in the top marginal tax rates.

Personal Exemptions. The personal exemption amount is $3,950 in 2014, up from $3,900 in 2013. Phase-outs for personal exemption amounts (sometimes called “PEP”) begin with adjusted gross incomes (AGI) of $254,200 for individuals and $305,050 for married couples filing jointly; the personal exemptions phase out completely at $376,700 for individual taxpayers ($427,550 for married couples filing jointly.)

Earned Income Tax Credit (EITC). For 2014, the maximum EITC amount available is $3,304 for taxpayers filing jointly with one child; $5,460 for two children; $6,143 for three or more children and $496 for no children.

Child Tax Credit. For taxable years beginning in 2014, the value used to determine the amount of credit that may be refundable is $3,000 (the credit amount has not changed).

Kiddie Tax. For 2014, the threshold for the kiddie tax – meaning the amount a child can take home without paying any federal income tax – remains at $1,000.

Adoption Credit. For taxable years beginning in 2014, the credit allowed for an adoption of a child with special needs is $13,190; the maximum credit allowed for other adoptions is the amount of qualified adoption expenses up to $13,190. Phase outs do apply beginning with MAGI in excess of $197,880.

Hope Scholarship Credit. In 2014, the Hope Scholarship Credit cannot exceed $2,500. The amount you can claim is equal to 100% of qualified tuition and related expenses not in excess of $2,000 plus 25% of those expenses in excess of $2,000 but not to exceed $4,000.

Flexible Spending Accounts. The annual dollar limit on employee contributions to employer-sponsored healthcare flexible spending accounts (FSA) remains at $2,500 for 2014.

Individual Retirement Account Contributions. The $5,500 limit on IRA contributions remains the same in 2014.

Federal Estate Tax Exemption. The exclusion amount for estates of decedents who die in 2014 is $5,340,000, up from a total of $5,250,000 in 2013.

Federal Gift Tax Exclusion. The annual exclusion for gifts remains at $14,000 for 2014.

Alternative Minimum Tax (AMT) Exemptions. The AMT exemption amount for tax year 2014 is $52,800 for individuals and $82,100 for married couples filing jointly. That compares to $51,900 and $80,800, respectively for 2013. In years past, the AMT was subject to a last minute scramble by Congress to “patch” the exemption but as part of the American Taxpayer Relief Act of 2012 (ATRA), the AMT is permanently adjusted for inflation – that’s why you see it in this list.

Earned Income Tax Credit (EITC). For 2014, the maximum EITC amount available is $3,304 for taxpayers filing jointly with one child; $5,460 for two children; $6,143 for three or more children.

 

FICA (Social Security)

Maximum Taxable Earnings...$117,000

Employee/Employer Deduction...6.20%

Self-Employment Tax...12.40%

 

FICA (Medicare)

Maximum Taxable Earnings...No Limit

Employee/Employer Deduction...1.45%

Self-Employment Tax...2.90%

 

Medicare Surcharge

Married Filing Jointly...$250,000

Married Filing Single...$125,000

Single...$200,000

Head of Household...$200,000

Qualified Widow(er)...$200,000

 (additional 0.09% for Medicare > wages exceed)

 

FUTA (Employer-paid)

Maximum 2014 Taxable Earnings...$7,000

Percent of Taxable Wages...6.00%

Maximum Credit...5.10%

Normal Net Tax...0.09%

 

 

PA State Income Tax

Wage Withholding...3.07%

 

PA Unemployment Insurance

Maximum 2014 Taxable Earnings...$8,500

Employee 2014 Deduction...0.07%

 

Tax Scams

Don't fall victim to tax scams. Remember — if it sounds too good to be true, it probably is. If you know of a tax fraud, you can report it to the IRS by sending completed Form 3949-A, Information Referral, to Internal Revenue Service, Fresno, CA 93888. You can download the form or call 1-800-829-3676 to order by mail.

Some of the recent scams the IRS has seen include:

  • IR-2011-73, IRS Urges Taxpayers to Avoid Becoming Victims of Tax Scams
  • IR-2011-39, Don’t Fall Prey to the 2011 Dirty Dozen Tax Scams

Education is the best way to avoid the pitfalls of these “too good to be true” tax scams. For more information, see:


Phony Arguments

No matter how some things are sliced, they're still baloney. If someone tells you that you don't have to pay taxes, check out The Truth About Frivolous Tax Arguments. This IRS.gov exclusive addresses some of the more common false "legal" arguments made by those opposed to compliance with the federal tax laws. Each contention is briefly explained, followed by a discussion of the legal authority that rejects the contention. The second section deals with frivolous arguments encountered in collection due process cases. The final section illustrates penalties imposed on those pursuing frivolous cases.

IR-2011-23, IRS Debunks Frivolous Tax Arguments, highlights the issue and possible penalties.  

IR-2004-41 describes the increasingly strong penalties the courts have imposed from March 2003 to March 2004 on taxpayers who pursued frivolous cases to delay IRS collection actions.

IR-2003-28 details penalties the Tax Court imposed from April 2001 until early March 2003 for making frivolous Collection Due Process arguments.


Identity Theft Scams

The IRS has issued several consumer warnings about the fraudulent use of the IRS name or logo by scamsters trying to gain access to consumers’ financial information in order to steal their identity and assets. Scamsters will use the regular mail, telephone, fax or email to set up their victims. When identity theft takes place over the Internet (email), it is called phishing.

The IRS does not initiate taxpayer communications through email. Unsolicited email claiming to be from the IRS, or from an IRS-related component such as EFTPS, should be reported to the IRS at phishing@irs.gov.

Additionally, clicking on attachments to or links within an unsolicited email claiming to come from the IRS may download a malicous computer virus onto your computer.

Learn more about identity theft.

Learn how to protect your personal information.

You may also report instances of IRS-related phishing attempts and fraud to the Treasury Inspector General for Tax Administration at 1-800-366-4484.