As the preparation of your 2016 income tax returns are completed and filed (due by April 18, 2017), it is the ideal time to be thinking about 2017 planning.
Following are a few notes and considerations we wanted you to be aware of:
- Contribution limits to 401(k) and 403(b) accounts remain unchanged for 2017 at $18,000, with an additional $6,000 catch-up contribution allowable for those age 50 or older.These limits apply to contributions to either a Traditional or Roth option within the plan. Also consider making after-tax contributions if allowed by your plan (as discussed in our April 2016 Newsletter update).
- Contribution limits for Roth IRA or Traditional IRA accounts also remain unchanged for 2017 at $5,500 with an additional $1,000 catch-up contribution allowable for those age 50 or older. Also note that you can still make contributions for tax year 2016 through April 18, 2017.
- Contribution limits to Health Savings Accounts (HSAs) for 2017 have increased to $3,400 for individual coverage or $6,750 for family coverage.The limit is increased by $1,000 if you are age 55 or older. Eligibility to make HSA contributions is limited to those covered by qualifying high deductible health plans. For HSAs you can also still make contributions for tax year 2016 through April 18, 2017.
- Qualified Charitable Contributions (QCDs) are now available on a permanent basis. Eligibility for QCDs is limited to those who have attained age 70½ or older. [What is a QCD?]
- If you had a larger than expected balance owed or a refund on your 2016 tax return, consider making adjustments to your income tax withholdings or consider whether you should be making estimated tax payments in 2017. The first estimated tax payment for 2016 is also due on April 18, 2017. Please be sure to contact us if you need assistance with projections, and/or making these adjustments.
- If you are aware of significant changes to your tax or financial situation in 2017, consider setting up a meeting to discuss tax planning opportunities or other adjustments that may be advised in order to optimize your situation.
As we write this update, Congress and President Trump are in the early stages of considering tax reform. See our January 2017 Newsletter update for some changes that may be included in the legislation. At this time, it appears less likely that any tax reform changes will be effective for tax year 2017, but we will continue to monitor developments and will provide additional communication as warranted.