Beware these 5 important tax changes for 2017:
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
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.
3. You might need a driver's license to file electronically.
4. Mileage deduction rate dips
Do you use your car for business? Then you know you can deduct those miles on your taxes. Unfortunately, that deduction has decreased. For the 2016 tax year, you can deduct 54 cents per mile that you drive your vehicle for business. That is down from 57.5 cents a mile in 2015. For the 2017 tax year, the deduction will decrease again to 53.5 cents per mile.
5. Three extra days to file