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2016 Key Tax Numbers
Social Security Wage Base, Self-employment Rate, Social Security and Medicare Rates - 2016
- 2016 Social Security wage base is $118,500 (same as 2015).
- Self-employed:
- 2016 self-employment tax rate is 15.3%, which equals the Social Security rate of 12.4% plus the Medicare tax rate of 2.9%.
- The 15.3% rate applies to earnings of up to $118,500 after the earnings are reduced by 7.65%. Schedule SE is used to figure Self-employment tax.
- If net earnings exceed $118,500, the 2.9% Medicare rate applies to the entire amount. There is no earnings limit for Medicare tax.
- One half of the self-employment tax may be deducted on the first page of Form 1040 as an above-the-line deduction. This means, you don't have to itemize to claim this deduction.
- Employees:
- 2016 Social Security rate for employees and employers is 6.2% each ($7,347 each), for a total rate of 12.4%.
- 2016 Medicare tax rate for employees and employers is 1.45% each, for a total of 2.9%.
- Medicare tax is withheld from all wages regardless of amount.
Personal Exemption (for yourself and each dependent) - 2016
2016 - Each Allowable Exemption: $4,050
Phaseout of Exemption Starts / Ends:
- Joint return/Qualifying widow(er): $311,300 / $433,800
- Head of Household: $285,350 / $407,850
- Single: $259,400 / $381,900
- Married filing separately: $155,650 / $216,900
Standard Deduction - 2016
- Married filing Joint return: $12,600
- Qualifying widow(er): $12,600
- Head of household: $9,300
- Single: $6,300
- Married filing separately: $6,300
- Dependents - minimum deduction: $1,050
- Additional Deduction if Age 65 or Older, or Blind - 2016 (born before January 2, 1952): Note: If you turned 65 on January 1, you are considered to be 65 as of December 31 for purposes of this deduction
- Married-per-spouse, filing jointly or separately:
- $1,250 ($2,500 for age and blindness)
- Qualifying widow(er):
- $1,250 ($2,500 for age and blindness)
- Single or head of household:
- $1,550 ($3,100 for age and blindness)
- Married-per-spouse, filing jointly or separately:
Capital Gain Rates for Assets Held Over One Year - 2016
If your top bracket is... | Your Maximum Rate is- |
---|---|
10% or 15% | 0% |
OVER 15% but below 39.6% | 15% |
39.6% | 20% |
Collectibles gain - maximum rate | 28% |
Unrecaptured Section 1250 gain on depreciated real estate - maximum rate NOTE: Unrecaptured Section 1250 gain is figured on the "Unrecaptured Section 1250 Gain Worksheet" in Schedule D instructions. A net loss, if any, from the 28% group reduces unrecaptured Section 1250 gain. The effect of the computation on the Schedule D Tax Worksheet is to tax unrecaptured Section 1250 gain at either a 25% rate or at the regular rates on ordinary income, whichever results in a lower tax. |
25% |
Qualified Dividends Tax Rate - 2016
If Your Top Bracket Is... | Your Qualified Dividends Rate is- |
---|---|
10% or 15% | 0% |
OVER 15% but below 39.6% | 15% |
39.6% | 20% |
IRS Mileage Rates 2016:
- Business: 54 cents per mile
- Medical and Moving: 19 cents per mile
- Charitable volunteers: 14 cents per mile
Exclusion for Employer Provided Transportation for 2016
- Free parking, transit passes, and van pooling: $255 per month
- Qualified bicycle commuting: $20 per month
IRA Contributions for 2016
Traditional IRAs:
- Traditional IRA contribution limit: $5,500
- Additional contribution if age 50 or older but under 70 1/2: $1,000
- Deduction phaseout for active plan participant:
- Single or head of household: $61,000 - $71,000
- Married filing jointly, two participants: $98,000 - $118,000
- Married filing jointly, one participant:
- Participant spouse: $98,000 - $118,000
- Non-participant spouse: $184,000 - $194,000
- Married filing separately, live together, either
participates:
- $0 - $10,000
- Married filing separately, live apart all year:
- Participant spouse: $61,000 - $71,000
- Non-participant spouse: no phaseout
Roth IRAs:
- Roth IRA contribution limit: $5,500
- Additional contribution if age 50: $1,000
- Contribution limit phaseout range:
- Single, head of household: $117,000 - $132,000
- Married filing separately, live apart all year: $117,000 - $132,000
- Married filing jointly, or qualifying widow(er): $184,000 - $194,000
- Married filing separately, live together at any time: $0 - $10,000
Elective Deferral Limits - 2016
- 401(k), 403(b), 457 plans: $18,000
- Salary-reduction SEP: $18,000
- SIMPLE IRA: $12,500
- Additional contribution if age 50 or older:
- 401(k), 403(b), governmental 457 and SEP plans: $6,000
- SIMPLE IRA: $3,000
Education - 2016
- American Opportunity credit limit-per student: $2,500
- Lifetime Learning credit limit-per-taxpayer: $2,000
- Phaseout of American Opportunity credit:
- Married filing jointly: $160,000 - $180,000
- Single, head of household, or qualifying widow(er): $80,000 - $90,000
- Phaseout of Lifetime Learning credit:
- Married filing jointly: $111,000 - $131,000
- Single, head of household, or qualifying widow(er): $55,000 - $65,000
- Student loan interest deduction limit: $2,500
- Phaseout of deduction limit:
- Married filing jointly: $130,000 - $160,000
- Single, head of household, qualifying widow(er): $65,000-$80,000
- Phaseout of deduction limit:
- Coverdell ESA limit: $2,000
- Phaseout of limit:
- Married filing jointly: $190,000 - $220,000
- All others: $95,000 - $110,000
- Phaseout of limit:
- Tuition and fees deduction:
- Tuition and fees deduction: tier 1 limit income cut-off $4,000
- Married filing jointly: $130,000
- Single, head of household, or qualifying widow(er) $65,000
- Tuition and fees deduction: tier 2 limit incone cut-off: $2,000
- Married filing jointly: $160,000
- Single, head of household, or qualifying widow(er): $80,000
- Tuition and fees deduction: tier 1 limit income cut-off $4,000
Long-term Care Premiums - 2016
- Limit on premium allowed as medical expense
- Age 40 or under: $390
- Over 40 but not over 50: $730
- Over 50 but not over 60: $1,460
- Over 60 but not over 70: $3,900
- Over 70: $4,870
2016 First-year expensing (Section 179) and Bonus Depreciation
For qualifying property placed in service in 2016, first-year expensing is allowed up to a limit of $500,000. The limit begins to phase out if the total cost of qualifying property exceeds $2,010,000.
Section 179 Deduction Phase-out:
If the cost of qualifying property placed in service in 2016 is more than $2,010,000, you reduce the $500,000 expensing limit dollar-for-dollar for each dollar the cost of qualifying property exceeds $2,010,000 (but not below zero).
For example, if you place machinery in service during 2016 costing $2,100,000, the $500,000 deduction limit is reduced by $90,000 to $410,000.
If the cost of the property was $2,510,000 or more, you could not take the Section 179 deduction because the $500,000 deduction limit would be completely phased out.
Bonus Depreciation:
The bonus depreciation rate for 2016 is 50%. Bonus depreciation is also called a Section 168(k) allowance and a special depreciation allowance.
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