Be aware of inflation-adjusted 2016 tax numbers

 

Certain tax numbers are adjusted for inflation each year. This year, many of the numbers are unchanged or change only slightly from 2015 amounts.

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Here are some of the tax numbers to use in your 2016 tax planning.

● The maximum earnings subject to social security tax in 2016 is $118,500, unchanged from 2015. The $15,720 earnings limit for those under full retirement age is also unchanged. If you’ve reached full retirement age, there is no earnings limit.
● The “nanny tax” threshold is $2,000 in 2016, up from $1,900 for 2015. If you pay household employees $2,000 or more during the year, you’re generally responsible for payroll taxes.
● The “kiddie tax” threshold remains $2,100 for 2016. If your under-age 19 child (under age 24 for students) has more than $2,100 of unearned income, such as dividends and interest income, this year, the excess could be taxed at your highest rate.
● The maximum individual retirement account (IRA) contribution you can make in 2016 remains unchanged – $5,500 if you’re under age 50 and $6,500 if you are 50 or older.
● The maximum amount of wages employees can put into a 401(k) plan remains at $18,000. The 2016 maximum allowed for SIMPLE plans is $12,500. If you are 50 or older, you can contribute up to $24,000 to your 401(k) and $15,500 to your SIMPLE plan.
● For 2016, the maximum amount you can contribute to a health savings account is $3,350 for individuals and $6,750 for families. The catch-up contribution when you’re age 55 or older is $1,000.
Contact us for additional information about these and other inflation-adjusted tax numbers.

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