Recent Posts:2018 NEW TAX LAW Tax Cuts and Jobs Act of 2017Everyone wants to know about the new 2018 tax laws, as evident by the hundreds of questions we have received. The tax bill is about 10,000 pages, so at this time no one person or firm could know the full impact because of limitations, exceptions and other complications written into this legislation. Following is a brief overview of a few of the major changes as they affect individuals for the year 2018.
2. The standard deduction is increased to $24,000 for married filing joint filers and $12,000 for single filers. 3. Taxpayers who are blind or age 65 or older, each receive an additional standard deduction of $1,300 if married filing joint and $1,600 if filing single. 4. The personal exemption deduction of $4,050 is eliminated. 5. Miscellaneous itemized deductions are eliminated. For example, expenses incurred for a safe deposit box, professional books and periodicals, job related expenses such as a computer or telephone, unreimbursed business expenses, tax preparation fees, investment management fees, business mileage, job hunting expenses, etc are no longer deductible. 6. Casualty and Theft loss deduction is eliminated, except for losses in federally declared disaster areas. 7. The Kiddie Tax is modified. The earned income, such as wages, of a child 18 or younger is taxed at the rate for single filers. The unearned income in excess of $1,050 such as interest, dividend and capital gains is taxed at the trusts and estates tax rate. This rate is 37% for taxable income in excess of $12,500. 8. The threshold for deducting medical expenses is reduced from 10% of adjusted gross income to 7.5%. 9. The marriage tax penalty is eliminated when the married filing joint return income is $400,000 or less. 10. Most of the tax bracket rates were reduced. 11.The child tax credit for qualified children under the age of 17 increases from $1,000 to $2,000. Also, the child tax credit is available to more taxpayers as the income phaseout threshold is increased for married filing joint taxpayers to $400,000 and for single filers to $200,000. 12. 529 College Savings Plan funds, in addition to college, can be used to pay for K-12 expenses such as private and religious school tuition and home schooling costs for your child. 13. Alimony paid will not be tax deductible or taxed as income if received for divorce or separation agreements entered into after 2018. 14. Moving expenses and reimbursements will not be tax deductible, except for the Military. 15. The new Qualified Business Income deduction may allow Pass-through entities such as Partnerships, S Corporations, Sole Proprietors, and rental businesses to deduct 20% of their “qualified business income”. This is an incredible benefit for businesses who qualify. However, it will be extremely complicated to determine if your business qualifies. Additionally, the complexity of the calculation, including limitations of the deduction, will be a challenge even for experienced CPAs. Obviously, in a 10,000 page tax bill, there are many other changes and we will continue to update you on this and other timely tax and financial topics. In the meantime, we strongly encourage you to file your 2017 tax return ASAP. Early filing will reduce your chance of identify theft where a criminal files a return with your information to obtain a fraudulent refund.
Ron Lykins | 01/26/2018
|