You slayed your 2017 taxes and now you’re counting down till your next refund.
We’re here to get you everything you deserve – find out how tax law changes could affect your filing next year.
The standard deduction has doubled. Single filers can take a standard deduction of $12,000, and married couples filing jointly can take $24,000.
But according to the IRS, around 30 percent of taxpayers itemize deductions.
Under the new tax law, the list of itemized deductions that taxpayers can claim on their tax return—will shrink considerably.
As for the 7 income tax brackets for individual taxpayers, the rates have changed slightly, which means the amount withheld from your paycheck will probably be lower, at least through 2025. Or maybe you need to adjust your withholdings – check here.
|Current Tax Brackets||Current Thresholds||New Tax Brackets||New Thresholds|
|10%||$0 to $18,650||10%||$0 to $19,050|
|15%||$18,651 to $75,900||12%||$19,051 to $77,400|
|25%||$75,901 to $153,100||22%||$77,401 to $165,000|
|28%||$153,101 to $233,350||24%||$165,001 to $315,000|
|33%||$233,351 to $416,700||32%||$315,001 to $400,000|
|35%||$416,701 to $470,700||35%||$400,001 to $600,000|
|39.6%||More than $470,700||37%||More than $600,000|
|Current Tax Brackets||Current Thresholds||New Tax Brackets||New Thresholds|
|10%||$0 to $9,325||10%||$0 to $9,525|
|15%||$9,326 to $37,950||12%||$9,526 to $38,700|
|25%||$37,951 to $91,900||22%||$38,701 to $82,500|
|28%||$91,901 to $191,650||24%||$82,501 to $157,500|
|33%||$191,651 to $416,700||32%||$157,501 to $200,000|
|35%||$416,701 to $418,400||35%||$200,001 to $500,000|
|39.6%||More than $418,400||37%||More than $500,000|
Taxpayers can get up to $2,000 per child under age 17, and under the new tax law more taxpayers can claim it.
If you have a dependent other than a young child, such as an elderly parent, or an older child who has a disability, taxpayers can claim a temporary credit of $500.
If you’re divorced or separated after Dec 31, 2018, no tax deduction for alimony payments is permitted. For spouses receiving alimony payments, the alimony is no longer considered taxable income. However, please note that alimony payments and procedures are handled the same for tax purposes if the divorce occurred in 2017 or earlier.
You can still deduct medical expenses as an itemized deduction, which will be even be more rare with the increased Standard Deduction. However, track your ‘out-of-pocket’ medical expenses to see if they are more than 7.5% of your adjusted gross income (AGI).
Taxpayers won’t be penalized for not buying health insurance in 2019 and thereafter but remember to keep your insurance in place throughout the rest of 2018 to avoid the penalty this year.
For homeowners, the mortgage interest deduction is limited to debt of up to $750,000.
Homeowners who sell their house for profit can omit up to $500,000 (for single filers it’s $250,000) from capital gains (conditions apply).
Interest from home equity loans can’t be deducted.
Estate tax applies to property transferred following a death. Few people will be impacted.
If you ride your bike to work, you can no longer deduct $20 each month from your income.
If you change jobs, and must move, you can no longer deduct moving expenses such as packaging (boxes, wrapping paper, etc.) or rental trucks.
Student loan interest can still be deducted.
Teachers can still deduct for money they spend on school supplies.
529 savings accounts: Up to $10,000 per year can be used for private/religious education at certain elementary or secondary schools.
Victims of an official national disaster can deduct losses as an itemized deduction, but ONLY if designated ‘national disaster’ by the President of the United States.
Personal exemptions are eliminated.
Great news self-employed individuals, whether operating as a Sole-Prop, LLC or S Corp (i.e. freelancers, contractors, gig workers) can take a 20% deduction of the net-profit and subtract it from the bottom line before income taxes (self-employment taxes will still apply on the net before the deduction kicks in). The C-corporate tax rate was cut to 21%—a huge win for corporations but won’t affect small business owners.
Small business owners can no longer deduction entertainment expenses while doing business with contacts, employees or partners.
Meals and food expenses in the office have also been now reduced to a 50% deduction. This includes the water cooler, coffee maker, snacks and lunches for employees and staff during hours (it used to be 100%).
Auto deductions have been dramatically improved if a small business owner is buying a new OR used car. Typically, mileage deductions have been the best move for entrepreneurs, but in 2018 the depreciation and actual expenses are more advantageous and offer great incentives for those purchasing a car in their business.
TaxSlayer’s easy-to-use technology and software will make all the new tax law changes available to you on your tax return and be there to keep you informed along the way.
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