Newsletter
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Tax changes you need to know for 2018 Tax Cuts and Jobs Act
Here are some of the most prominent changes that could affect you
Ø
Standard Deduction
Ø Those who are married and filing jointly will have an increased
standard deduction of $24,000, up from the $13,000 it would have been under
previous law.
Ø Single taxpayers and those who are married and file separately
now have a $12,000 standard deduction, up from the $6,500 it would have been
for this year prior to the reform.
Ø For heads of households, the deduction will be $18,000, up from
$9,550.
Ø If you are age 65 or older, blind or disabled, you can tack on
$1,300 to your standard deduction ($1,600 for unmarried taxpayers).
Ø Personal exemption has been eliminated with the tax reform bill.
Ø Top income tax rate
A new 37 percent top rate will
affect individuals with incomes of $500,000 and higher. The top rate kicks in
for married taxpayers who file jointly at $600,000 and up.
The new tax law also includes changes to other tax brackets.
For comparison, here would be the 2018 brackets under the
current tax law, adjusted for inflation.
|
Federal tax brackets:
2017 tax brackets |
||
|
Tax rate |
Single |
Head of household |
|
10% |
Up
to $9,325 |
Up to $13,350 |
|
15% |
$9,326
to $37,950 |
$13,351 to $50,800 |
|
25% |
$37,951
to $91,900 |
$50,801 to $131,200 |
|
28% |
$91,901
to $191,650 |
$131,201 to $212,500 |
|
33% |
$191,651
to $416,700 |
$212,501 to $416,700 |
|
35% |
$416,701
to $418,400 |
$416,701 to $444,550 |
|
39.6% |
$418,401
or more |
$444,551 or more |
|
Tax rate |
Married
filing jointly or qualifying widow |
Married filing
separately |
|
10% |
Up
to $18,650 |
Up to $9,325 |
|
15% |
$18,651
to $75,900 |
$9,326 to $37,950 |
|
25% |
$75,901
to $153,100 |
$37,951 to $76,550 |
|
28% |
$153,101
to $233,350 |
$76,551 to $116,675 |
|
33% |
$233,351
to $416,700 |
$116,676 to $208,350 |
|
35% |
$416,701
to $470,000 |
$208,351 to $235,350 |
|
39.6% |
$470,001
or more |
$235,351 or more |
|
Federal tax brackets:
2018 tax brackets |
||
|
Tax rate |
Single |
Head of household |
|
10% |
Up to $9,525 |
Up to $13,600 |
|
12% |
$9,526 to $38,700 |
$13,601 to $51,800 |
|
22% |
$38,701 to $82,500 |
$51,801 to $82,500 |
|
24% |
$82,501 to $157,500 |
$82,501 to $157,500 |
|
32% |
$157,501 to $200,000 |
$157,501 to $200,000 |
|
35% |
$200,001 to $500,000 |
$200,001 to $500,000 |
|
37% |
$500,001 or more |
$500,001 or more |
|
Tax rate |
Married
filing jointly or qualifying widow |
Married filing
separately |
|
10% |
Up to $19,050 |
Up to $9,525 |
|
12% |
$19,051 to $77,400 |
$9,525 to $38,700 |
|
22% |
$77,401 to $165,000 |
$38,701 to $82,500 |
|
24% |
$165,001 to $315,000 |
$82,501 to $157,000 |
|
32% |
$315,001 to $400,000 |
$157,001 to $200,000 |
|
35% |
$400,001 to $600,000 |
$200,001 to $300,000 |
|
37% |
$600,001 or more |
$300,001 or more |
Ø Child tax credit
The child tax credit has been raised to $2,000 per qualifying
child, those who are under 17, up from $1,000. A $500 credit is available for
dependents who do not get the $2,000 credit. Phases out over income limits and
eliminated for those with income over 200K single 400K Married Filing Jointly.
Ø New tax credit for non-child dependents, like elderly
parents.
$500 credit for non child dependent
Ø Mortgage interest
The deduction for interest is capped at $750,000 for mortgage
loan balances taken out after Dec. 15 of last year. The limit is still $1
million for mortgages that were established prior to Dec. 15, 2017. No more
Home Equity loan deductions.
Ø State and local taxes
The itemized deduction is limited to $10,000 for both income and
property taxes paid during the year.
Ø
Contribution limits
for retirement savings
Employees who participate in
certain retirement plans ‒ 401(k), 403(b) and most 457 plans, and the Thrift
Savings Plan – can now contribute as much as $18,500 this year, a $500 increase
from the $18,000 limit for 2017.
Ø Savings in IRAs
Savers who contribute to individual retirement accounts will
have higher income ranges following cost-of-living adjustments. Note that the
deduction phases out for individuals and their spouses who are covered by
workplace retirement plans.
For single taxpayers, the limit will be $63,000 to $73,000.
For married couples, the phaseout range will vary depending on
whether the IRA contributor is covered by a workplace retirement plan or not.
When the spouse who is investing has access to an employer plan, the range is
$101,000 to $121,000. For individuals who don't have a retirement plan but are
married to someone who does, the phaseout has been raised to $189,000 to
$199,000.
The phaseout was not adjusted for married individuals who file a
separate return and who are covered by a workplace retirement plan. That range
is $0 to $10,000.
Ø Contributions to Roth IRAs
For individuals who are single or the heads of their households,
the income phaseout has been raised to $120,000 to $135,000. For married
couples who file jointly, the range climbs to $189,000 to $199,000.
The phaseout was not adjusted for married individuals who file a
separate return. That is $0 to $10,000.
Ø Miscellaneous Itemized Deductions Suspended
Ø Unreimbursed employee expenses
Ø All other 2% miscellaneous deductions Suspended – Advisor fees,
Tax Prep Fees,
Ø Hobby expenses
Ø Advisory Fees
Ø Tax Preparation fees
Ø Job Hunting expneses
Ø Legal fees for collecting or protecting taxable income
Ø Safe deposit boxes
Ø Trust administration fees
Ø Schedule
A or Itemized Deductions
Medical
expenses back to 7.5 % of AGI
Casualty
and theft loss gone
Ø Other
Moving Expenses gone except military
