There has been a great deal of information about the new tax reform law and what it means for the current tax year. But with tax season for the 2017 tax year just around the corner, taxpayers want to know what's new for 2017. Here's what you need to know about changes to your 2017 tax returns (the one you'll be filing beginning on Monday):
Do I have to file a federal income tax return?
Not everyone needs to file a tax return this season. If you're not sure, check out the cheat sheet - and other info - here.
When is my tax return due?
You'll file your federal form 1040 (or request an extension) by April 17, 2018. Military personnel serving in a designated combat zone or contingency operation may be able to file later.
What is my tax rate?
The IRS announced the 2017 tax rates in 2016: You'll find those rates here. The new tax rates that you've been hearing about (you can find them here) are those that take effect in 2018 and will be used to file your tax return in 2019.
What about those new withholding tables?
You'll find the new withholding tables for 2018 here. Again, while these take effect in 2018, they do not affect your 2017 tax return due in 2018.
Why does the front page of the form 1040 look different?
There's been a lot of chatter (and interesting conspiracy theories) about line 34 of the 2017 federal form 1040. If you look closely, you'll see that it says, "Reserved for future use." That sure looks exciting, but it's not. The Internal Revenue Service (IRS) had anticipated that the now-expired tuition and fees deduction could be reinstated as part of last minute, retroactive extenders legislation. That didn't happen and the tuition and fees deduction remains expired, meaning that there is no tuition and fees deduction available for 2017. Rather than redesign the form again for this one change, the IRS simply left in a placeholder:
What happened to the standard deductions and personal exemption amounts?
Nothing, they're still on your 1040 for 2017. The only changes to the standard deductions and personal exemption amounts for 2017 were adjustments for inflation. The standard deduction does not double until the 2018 tax year, and the personal exemption amounts don't disappear until the 2018 tax year. You can find the 2017 standard deduction and personal exemption amounts here.
What about Schedule A?
There are a couple of changes to the 2017 Schedule A, including one that was part of tax reform:
- The 7.5% floor for medical expenses is back. It's called a "floor" because you can only deduct expenses over that percentage of your adjusted gross income (AGI). Let's say your AGI is $40,000, and your medical expenses are $5,000. If you itemize, you can claim $5,000 in expenses less the floor (7.5% x $40,000 = $3,000), or a $2,000 deduction. The medical expenses provision is effective retroactively to the beginning of this year so you'll see this change on your 2017 tax return.
- Also, as with the tuition and fees deduction, the deduction for mortgage insurance premiums expired in 2016 and isn't available for the 2017 tax year. As a result, line 13 reads as "Reserved for future use."
- If you're looking for information about mileage rates for 2017 used on a Schedule A, you'll find those here.
To find out about changes to the 2018 Schedule A, click here.
Are there still limits on itemized deductions?
Yes, the limits for itemized deductions still apply in 2017. Phaseouts begin when your adjusted gross income (AGI) is more than $261,500 for single taxpayers; $287,650 for taxpayers filing as head of household (HOH); $313,800 for married taxpayers filing jointly or qualifying widow(er); and $156,900 for married taxpayers filing separately. That said, don't confuse the overall limits on itemized deductions with the caps and other limitations which apply to individual itemized deductions (i.e. limits on charitable contributions).
Are there any changes to Schedule C? What about Schedules E and F?
There are no significant changes to the 2017 Schedule C, E, or F.
- If you're looking for information about mileage rates for 2017 used on a Schedules C, E or F, you'll find those here.
The passthrough deduction isn't applicable for the 2017 tax year. For more on changes which impact the 2018 tax year, click here.
Do I still have to report health care coverage?
Yes. The repeal of the mandate takes effect in 2019 and affects the return you'll file in 2020. For 2017, you're still required to demonstrate that you have health coverage. Taxpayers that don’t have coverage must claim a waiver or exemption, or be subject to a penalty. If you failed to tick the box in past years, the IRS would still accept and process tax returns; that is no longer the case (for more, click here). For the 2017 tax year, the penalty, which is payable in 2018, is equal to 2.5% of your adjusted gross income (AGI), or $695 per adult and $347.50 per child, up to a maximum of $2,085, whichever is higher.
It's not exactly a tax return question, but related: Why does my form W-2 look different?
Last year, some forms W-2 included a new "verification code" in box 9. This year, you'll see more of these codes rolling out (50 million forms W-2 had the code in 2017 as compared to 2 million in 2016) but not all W-2s will have them. The 16-digit code is used to help prevent fraud. If you e-file and your W-2 has a verification code in box 9, include it when prompted by your tax software. You don’t need to enter the verification code if you file your return on paper.
Why do I need to provide additional info if I check my tax account online?
This is another security measure intended to combat identity fraud. The IRS has upgraded its identity verification process for certain tools available on IRS.gov, including e-Services and your online tax account. To find out more, head over to IRS.gov/SecureAccess.
Why is my tax refund late?
The law now requires the IRS to hold refunds tied to the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) until February 15.The rule which bars IRS from issuing refunds for taxpayers claiming the Earned Income Tax Credit or the Additional Child Tax Credit before mid-February applies to the entire refund- even the portion not associated with the EITC and ACTC. There may be additional delays: factoring in weekends and the President’s Day holiday, the IRS expects the earliest EITC/ACTC related refunds to be available in taxpayer bank accounts or on debit cards starting on February 27, 2018.