By Nathan Vinson, Attorney
English, Lucas, Priest and Owsley, LLP
Each year, the IRS sets dollar amounts for specific types of exemptions. Usually, these don’t change much – $100 here, $50 here, etc. You’ll need these numbers as you do your taxes this year.
The personal exemption amount for 2016 taxes is $6,300 for an individual or for a married couple filing separately (so that’s per person). As you’d expect, married filing jointly is twice that at $12,600. Head of households can claim $9,300, and surviving spouse $12,600. For anyone who takes the standard deduction and doesn’t itemize, that is the amount you’ll claim.
However, the exemption is subject to a phase-out that begins with adjusted gross incomes of $259,400 ($311,300 for married couples filing jointly). It phases out completely at $381,900 ($433,800 for married couples filing jointly.)
Forbes published an extensive piece that goes into more detail, including tax tables, which you can read here.
Itemizing tax deductions
Those who are itemizing deductions can, in most cases, deduct the following expenses (but please, consult with a CPA to be sure that you qualify):
- Home office deduction, which allows you to write off a portion of the square footage of your home as office space, along with utilities and other costs.
- Charitable donations, which are to 501(c)3 non-profits. Keep receipts or letters from these organizations for proof of the amount you’ve given, particularly if it’s large. You may be asked to substantiate your claim by the IRS.
- Mortgage interest paid on your primary residence.
- Adoption costs (which we discussed in a previous post, which you can find here).
- Job search costs for those seeking employment.
- Medical expenses, but only if it is in excess of 10 percent of your income if you are 64 years old or under. For those 65 years old and older, the threshold is 7.5 percent.
- Education expenses related to receiving a college degree.
Those earning a high income are subject to a phase-out or cap of deductions, which are called Pease limitations, so named for the Ohio legislator who created them. Pease limitations for 2016 are set at $258,250 for individuals, $309,900 for married couples filing jointly, $284,050 for a head of household, and $154,950 for married couples filing separately (that’s per person).
While we aren’t in the business of preparing personal income tax returns, we do help taxpayers who want to dispute an IRS finding or who have other complicated tax questions. Please contact me, attorney Nathan Vinson, at (270) 781-6500 or firstname.lastname@example.org.