Reference: IRC Sec 25D and IRS “Residential Property Updated Q&A” [Aug 2016]

The 30% tax credit has been extended for installations completed prior to 12/31/19 for primary residence and second home. (This credit is not available on rentals). From 1/1/2020 through 12/31/2020, the credit is 26%. From 1/1/21 through 12/31/2021, the credit is 22%.

After 12/31/2021, the credit is not available unless extended further by Congress.

Reference: Lowe v. Commissioner, TC Memo 2016-206 & IRS Pub 504, Table 3

Since 2005, divorced parents have had to meet the “physical presence test” to claim their children as dependents.  The child must have lived with the parent for more than half of the year OR the parent who meets that test must give up his/her dependency exemption by filing Form 8332.

In this case, the mother wasn’t the custodial parent and lost the dependency exemption and child tax credit because she couldn’t prove that the child lived with her for more than half of the year as required under Code Sec 152(c).  KEEP GOOD RECORDS… and note that a “day” is counted based on where the child is at midnight.

Reference: IR 2016-141, 10/27/2016

While many qualified plan limits remain unchanged from 2016, some did change.  Here’s two common ones from that list:

Defined contribution plans: Code Sec 415(c)(1)(A) limit increases from $53,000 to $54,000.

Compensation limit: The maximum annual compensation taken into account for plan calculations under various code sections (401, 404, and 408) increases from $265,000 to $270,000. 

Other changes can be viewed in the Bulletin itself.

Ref: United States Tax Reporter Income paragraph 31,114.

For 2017, the Social Security wage base has increased to $127,200 (from $118,500 in 2016). This means that the maximum Social Security paid by an individual on his/her wages in 2017 will be $127,200 * 6.2% = $7,886.40.

Medicare remains unchanged at 1.45% of wages up to $200,000 and 2.35% on wages over $200,000 (without limit).  [The additional 9/10 percent was added as part of the ACA (aka Obamacare) to “wealthy individuals”]..