Frequently Asked Questions about taxes

Do I need to file a return?
What is my personal exemption?
What is the standard deduction?
What is my tax bracket?
How much can I deduct for mileage?
How much can I contribute to my retirement plan?
How much are the gift and estate tax exemptions?
Updated 8/24/2017

Do I need to file a return?

To taxpayers who have faithfully filed tax returns for years, it may be surprising to find that they may not have to file. Generally, you do not need to file a tax return if your income is under these amounts:

2017 Filing Status Federal Arizona resident
Under age 65 65 or older Under 65 No tax*
Single $10,400 $11,950 $5,500 $7,045
Head of Household $13,400 $14,950 $5,500 $12,083
Married filing jointly $20,800 $22,050/$23,300 $11,000 $14,183
Married filing separately $4,050 $4,050 $5,500 $7,045
Widow(er) with qualifying dependent $16,750 $18,000 -- --

However...you must file a return if you had self-employment income of $400 or more.

Or, you should file if someone else (like your parents) could claim you as a dependent and you earned over $900 or had investment income (interest on savings, stock dividends, etc.) of more than $300.

Also, you should file a return even if your income is under these limits if you:

  • Had withholding on wages, pensions, retirement distributions or investment accounts.
  • Are eligible for an earned income credit or other credit.
The federal Form 1040 actually collects several other taxes including:
  • Self employment (Social Security and Medicare) tax
  • Social Security and Medicare tax on tip income
  • Early withdrawal tax on IRA's and retirement plans
  • Alternative minimum tax
  • Household employee payroll tax ("nanny tax")

You may be required to file a state return even if you don't have to file a federal one. There are other circumstances where you might be required to file, or it might be beneficial to file, so check with an Enrolled Agent to be sure.

*These figures include the personal exemption and standard deduction. Even though there is generally no tax up to this amount, taxpayers must still file a return if their Arizona incomes are above the "no filing" amount.

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Personal exemptions

Personal exemptions for 2017 are $4,050 per person. You are entitled to claim one exemption apiece for yourself, your spouse if married, and each dependent you can claim. If someone else (such as your parent) claims you as a dependent, you cannot take an exemption for yourself.

In Arizona, personal exemptions are figured differently. A single person or a married person filing separately gets a personal exemption of $2,100. A married couple filing jointly or a single head of household has a personal exemption of $4,200. Dependent exemptions are$2,300 per person.

Filing Status20172016
FederalArizonaAZ dependentFederalArizonaAZ dependent
Single$4,050$2,100$2,300$4,050$2,100$2,300
Head of Household$4,050$2,100$2,300$4,050$2,100$2,300
Married filing jointly$8,100$4,200$2,300$8,100$4,200$2,300
Married filing separately$4,500$2,100$2,300$4,050$2,100$2,300
Widow(er) with qualifying dependent$8,100NANA$8,100NANA

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Standard deductions

The IRS excludes from your taxable income a specified amount of expenses, called a "standard deduction." If your actual expenses in the allowed categories total more than the standard deduction amount, you may deduct those actual expenses, which is called "itemizing." If your itemized deductions are less than the standard amount, you are better off to use the standard deduction.

2017 Filing Status Federal Over 65 Arizona
Single $6,350 $7,900 TBA#
Head of Household $9,350 $10,900 TBA #
Married filing jointly $12,700 $13,950/$15,200 TBA #
Married filing separately $6,350* $7,900* TBA #
Widow(er) with qualifying dependent $12,700 $13,950 --
Dependent of someone else $1,050 @ $2,600 @ $2,100

2016 Filing Status Federal Over 65 Arizona
Single $6,300 $7,850 $5,099
Head of Household $9,300 $10,850 $10,189
Married filing jointly $12,600 $13,850/$15,100 $10,189
Married filing separately $6,300* $7,850* $5,099
Widow(er) with qualifying dependent $12,600 $13,850 --
Dependent of someone else $1,050 @ $2,600 @ $5,099

* Only if spouse does not itemize; otherwise $0
# Amounts are indexed annually; Arizona has not yet released annual adjustments
@ Standard deduction for dependents is $1,050, unless earned income (not investments) more than $1,000
Age 65 or older Single or HOH gets an additional $1,550 standard deduction, $1,250 each age 65 for MFJ, MFS or QW

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Tax brackets

      Income tax is based on your income after personal exemptions, standard or itemized deductions, and other adjustments are subtracted. A tax bracket is the rate at which the top of your income is taxed, but not all of it. Someone in a 28 percent tax bracket has part of their income taxed at 10 percent and part at 25 percent, with only the highest portion at 28 percent. The tax bracket tells you how much you will have to pay in federal income tax on each additional dollar you make.
2017
Federal
Tax bracket
Single HOH MFJ or QW MFS Trust Long-Term
Capital
Gains *
For income over...
10% $0 $0 $0 $0 N/A 0%
15% $9,325 $13,350 $18,650 $9,325 $0 0%
25% $37,950 $50,800 $75,900 $37,950 $2,500 15%
28% $91,900 $131,200 $153,100 $76,550 $5,950 15%
33% $191,650 $212,500 $233,350 $116,775 $9,050 15%
35% $416,700 $416,700 $416,700 $208,350 N/A 15%
39.6% $418,400 $444,550 $470,700 $235,350 $12,400 20%

        * Net Investment Income (NII) tax of 3.8% is additional for taxable income above $200,000 (single or head of household), $250,000 (married filing jointly) or $125,000 (married filing separately).
2016
Federal
Tax bracket
Single HOH MFJ or QW MFS Trust Capital Gains
For income over...
10% $0 $0 $0 $0 N/A 0%
15% $9,275 $13,250 $18,550 $9,275 $0 0%
25% $37,650 $50,400 $75,300 $37,650 $2,550 15%
28% $91,150 $130,150 $151,900 $75,950 $5,950 15%
33% $190,150 $210,800 $231,450 $115,725 $9,050 15%
35% $413,350 $413,350 $413,350 $206,675 NA 15%
39.6% $415,050 $441,000 $466,950 $233,475 $12,400 20%

Arizona Income over
Status Tax bracket 2017 2016 2015
Single or MFS 2.59% TBA $0 $0
2.88% TBA $10,179 $10,163
3.36% TBA $25,445 $25,406
4.24% TBA $50,890 $50,812
4.54% TBA $152,668 $152,434
MFJ or HOH 2.59% TBA $0 $0
2.88% TBA $20,357 $20,325
3.36% TBA $50,890 50,812
4.24% TBA $101,779 $101,623
4.54% TBA $305,336 $304,868

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Mileage rates

Standard mileage rates may be used as an alternative to deducting actual expenses. The standard mileage rate must be claimed the first year a vehicle is used for deductible purposes; you cannot change to it once you have started claiming actual expenses. To deduct either mileage or actual expenses, you must have a written record for each trip showing:

  • Date
  • Miles driven
  • Where to
  • Business purpose
Use 2017 2016 2015 2014
Business 53½¢ 54¢ 57½ ¢ 56 ¢
Medical 17¢ 19¢ 23 ¢ 23½ ¢
Moving 17¢ 19¢ 23 ¢ 23½ ¢
Charitable 14¢ 14¢ 14 ¢ 14 ¢

Retirement plan limits

Taxpayers age 50 and older may contribute a higher amount to retirement plans to "catch up," regardless of whether or they had contributed the maximum amounts earlier in life.

Year IRA & Roth 401(k) & 403(b) SIMPLE SEP
25% of compensation
Under age 50 Catchup Under age 50 w/ Catchup Under age 50 w/ Catchup
2017 $5,500 $6,500 $18,000 $24,000 $12,500 $15,500 $54,000
2016 $5,500 $6,500 $18,000 $24,000 $12,500 $15,500 $53,000
2015 $5,500 $6,500 $18,000 $24,000 $12,500 $15,500 $53,000

Social Security201720162015
Medicare Part B premium $134/mo
($1,608/yr)
$121.80/mo
($1,461.60)
$104.90/mo
($1,258.80/yr)
Maximum earnings taxable
by Social Security
$127,200 $118,500 $118,500
Birth year to turn full retirement age (FRA) this year 1951 1950 1949
Maximum earnings before FRA $16,920
($1,410/mo)

$15,720
($1,310/mo)

$15,720
($1,310/mo)
Maximum earnings for
turning FRA this year
$44,880
($3,740/mo)
$41,880
($3,490/mo)
$41,880
($3,490/mo)
Social Security website     www.SocialSecurity.gov

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Estate and gift tax exemption

Your estate will have to pay taxes if its net value when you die is more than the "exempt" amount set by Congress. The exemption amount is reduced by any gifts throughout the lifetime of more than the annual gift tax exclusion limit. The gift exclusion is per donor and per recipient, so a married couple can exclude gifts up to double the amount shown in the chart to a child, for instance. Making a gift of more than the annual exclusion does not trigger immediate taxes, only the need to file a gift tax Form 709.

Year of death Federal estate
tax exemption
Highest rate on
exceeding exemption
Annual gift tax
exclusion
2017 $5.49 million 40% $14,000
2016 $5.45 million 40% $14,000
2015 $5.43 million 40% $14,000