Business Use of Home. Taxpayers have an option to use a simplified method of calculating the deduction for business use of their home in lieu of home depreciation deduction and other related expenses. A standard deduction is allowed of $5 per square foot of home used for business but limited to 300 square feet. There is no claim of home depreciation deduction, therefore, no recapture of depreciation later. Other home-related itemized deductions, such as mortgage interest, real estate taxes are claimed on schedule A.
Need to issue 1099-Misc? If you paid $600 or more to anyone for services during 2016 you may need to issue a form 1099-Misc. For example, you paid consultants, lawyers, painters, independent contractors, designers, and the like.
You will need to ask payees fill out the form W-9 to obtain information for form 1099-Misc such as name, address, tax classification, tax ID number.
You have to furnish payees the forms 1099-Misc on or before January 31, 2017. Starting 2016, taxpayers are required to file Forms 1099-MISC by January 31, 2017, if you are reporting nonemployee compensation in box 7 (it was February 28 before). Otherwise, you can file Forms 1099-Misc on paper by February 28, 2017, or March 31, 2017, if filing electronically.
Social security and Medicare tax for 2017. The social security tax rate is 6.2% each for the employee and employer, unchanged from 2016. The social security wage base limit is $127,200. The Medicare tax rate is 1.45% each for the employee and employer, unchanged from 2016. There is no wage base limit for Medicare tax.
0.9% Medicare tax increase on employee wages and self-employment income when AGI exceeds $250,000 for MFJ, $125,000 for MFS and $200,000 for any other filing status. Employers are required to begin withholding Additional Medicare Tax in the pay period in which they pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. Additional Medicare Tax is only imposed on the employee. There is no employer share of Additional Medicare Tax
3.8% Medicare tax applies to the lesser of net investment income or the excess of modified AGI over the threshold amount - $250,000 for MFJ, $125,000 for MFS and $200,000 for any other filing status
The AGI threshold for deducting medical expenses as an itemized deduction is increased to 10% of AGI in lieu of 7.5%, unless taxpayer or spouse turns age 65 before the end of the year