Social Security wage base increases next year. The Social Security Administration (SSA) announced that the maximum earnings subject to Social Security tax will increase from $118,500 to $127,200 in 2017. Next year, an employer must withhold 6.2% Social Security tax on the first $127,200 of employee wages and 1.45% Medicare tax on the first $200,000 of employee wages. On employee wages in excess of $200,000, employers must withhold 2.35% Medicare tax (regular 1.45% Medicare tax plus 0.9% additional Medicare tax).
There’s still time to save both energy and taxes by making green home investments. The tax credit for qualified energy-efficiency investments in a principal residence is extended through 2016. It equals 10% of certain expenses (such as exterior windows and doors that meet Energy Star requirements) plus 100% of certain other expenses (such as qualified central air conditioners and water heaters), subject to a maximum overall credit of $500, reduced by credits claimed in earlier years. Additional rules and limits apply. For more information, contact us.
Do you have a teenage child working this summer? In a summertime “Tax Tips,” the IRS offers several tips for young people with summer jobs. For example, students who are waitstaff should know that all tip income is taxable. They must keep a daily log to report their tips to their employers, and report $20 or more in cash received in any single month. And they must report all yearly tips on their tax returns. Go to http://bit.ly/29hJLa4 to see all the tips for student workers.