The IRS has released inflation-adjusted tables for 2017 reflecting any increases in the FSA deferral limit, foreign earned income exclusion, and excludable transportation fringes, among other changes [Rev. Proc. 2016-55, 10-25-16; https://www.irs.gov/pub/irs-drop/rp-16-55.pdf].
Qualified transportation fringes
The amounts that may be excluded from gross income for employer-provided “qualified transportation fringe benefits” for 2017 are as follows: $255 per month for “qualified parking” (unchanged from 2016), and $255 per month for “transportation in a commuter highway vehicle and any transit pass” (unchanged from 2016).
Health flexible spending arrangements
For plan years beginning in 2017, the dollar limitation under IRC §125(i) on voluntary employee salary reductions for contributions to health flexible spending arrangements is $2,600 ($2,550 in 2016).
The standard deduction amounts for 2017 for married couples filing jointly or surviving spouses increases to $12,700 ($12,600 in 2016), increases to $6,350 for single taxpayers and married taxpayers filing separately ($6,300 in 2016), and increases to $9,350 for heads of household ($9,300 in 2016).
The personal exemption amount for 2017 is $4,050 (unchanged from 2016).
Foreign earned income exclusion
For 2017, the maximum foreign earned income exclusion amount under IRC §911(b)(2)(D)(i) is $102,100 ($101,300 in 2016). The maximum amount of the foreign housing cost exclusion is $14,294 ($14,182 in 2016).
Medical Savings Accounts
To be eligible to make contributions to a Medical Savings Account (or to have the employer make the contributions), an employee must be covered by a high deductible health plan. For 2017, a high deductible health plan is a plan with an annual deductible of $2,250-$3,350 for individual coverage (unchanged from 2016) and $4,500-$6,750 for family coverage ($4,450-$6,700 in 2016).
Maximum out-of-pocket expenses can be no more than $4,500 for individual coverage ($4,450 in 2016) and $8,250 for family coverage ($8,150 in 2016).
Long-term care insurance benefits
If a long-term care insurance contract makes per diem benefit payments, the amount of the payments that is excluded from income in 2017 is capped at $360 per day ($340 in 2016).
For 2017, the maximum amount that can be excluded from an employee’s gross income for qualified adoption expenses under an employer’s adoption assistance program is $13,570 ($13,460 in 2016). The maximum amount that can be excluded in connection with the adoption of a child with special needs is $13,570 ($13,460 in 2016).
The amount excludable from an employee’s gross income begins to phase out for taxpayers with adjusted gross income of $203,540 ($201,920 in 2016) and is completely phased out for taxpayers with adjusted gross income of $243,540 ($241,920 in 2016).
Pipeline construction industry per diem option
For 2017, an eligible employer may pay certain welders and heavy equipment mechanics up to $17 per hour for rig-related expenses that will be deemed substantiated under an accountable plan (unchanged from 2016) and up to $11 per hour for fuel (unchanged from 2016), when paid in accordance with Rev. Proc. 2002-41 (2002-23 IRB 1098).
Penalties for failure to file correct information returns and to provide correct payee statements
For tax years beginning in 2017 (forms filed in 2018), the penalty amounts under IRC §6721, failure to file correct information returns, and the penalty amounts under IRC §6722, failure to furnish correct payee statements, are $260 under the general rule, $50 if corrected on or before 30 days after the required filing date, and $100 if corrected after the 30th day but on or before August 1 (all unchanged). For businesses with annual gross receipts of $5 million or less, the maximum penalty increases to $1,072,500 (from $1,064,000 in 2016) under the general rule, to $187,500 (from $186,000) if corrected on or before 30 days after the required filing date, and to $536,000 (from $532,000) if corrected after the 30th day but on or before August 1. For businesses with annual gross receipts of more than $5 million, the maximum penalty increases to $3,218,500 (from $3,193,000 in 2016) under the general rule, to $536,000 (from $532,000) if corrected on or before 30 days after the required filing date, and to $1,609,000 (from $1,596,500) if corrected after the 30th day but on or before August 1.
For intentional disregard of the obligations under either of these provisions, the penalty is $530 per return in 2017 (unchanged from 2016), and there is no calendar year limit.