The Tax Cuts and Jobs Act of 2017, passed into law in December 2017, represents the most sweeping tax law changes in decades. It will affect individuals and households, family enterprises, real estate, eatate planning and family law.
Head of Household: $18,000.00
Single & Married Filing Separately: $12,000.
Over 65 or blind: $1,250 more per person ($1,550.00 if unmarried)
So taxpayers that used to itemize deductions may not have to with increased Standard Deduction.
In the past taxpayers were given a deduction for (personal exemption) over $4,000.00 per person on the return. This no longer exists. GONE.
Although fewer taxpayers will itemize deductions, they will face changes:
* Mortgage interest deducted on up to $750,000.00 of new acquisition debt on a primary or second residence.
* Can deduct any combination of residential property tax and income or sales taxes up to $10,000.00 cap. (Property taxes remain fully deductible for taxpayers in a business or for-profit activity, so taxes paid on rental realty can be taken in full on Schedule E.
*Eliminated: No deductions for job-related moves (except military). No miscellaneous write-offs subject to the 2%-of-AGI (Average Gross Income) threshold, including employee business expenses, brokerage and IRA fees, hobby expenses and tax return preparation costs. Theft losses.
* Alimony (Spousal Maintenance) - For post-2018 divorce decrees, although it's good news to recipients, who will not be taxed on alimony they receive.
* Personal casualty losses, excluding those where President declared disaster areas.
* Charitable contribution: AGI limitation on cash donations to qualified charities is hiked from 50% to 60%.
* The medical expense deduction threshold lowered from 10% of AGI to 7.5 % on AGI for deducting 2017 and 2018 medical expenses.
The requirement that taxpayers have health insurance, qualify for an exemption, or pay a fine is repealed for post-2018 years. THE MANDATE CONTINUES TO APPLY FOR 2018.
The reason you had kids! (Joke). Credit has been doubled to $2,000.00 for each dependent under age 17, with up to $1,400.00 refundable to lower-income taxpayers,
Children must have SSN to qualify for Credit. ITIN no longer qualify.
*A $500.00 credit for each dependent who is not qualifying child including, for example, an elderly parent you take care of or a disabled adult child. It's nonrefundable meaning it can be applied against taxes owed but no spill-over refunded.
Each tax return is unique. Most tax preparation will follow prices below.
This is the base price without Schedules.
This price is for a 1040EZ belonging to a taxpayer already claimed as a dependent on someone else's return.
Each year a group of ITIN (Individual Taxpayer Identification Number) recipients must renew their ITIN. They must bring their unexpired foreign passport with photo, or birth certificate and government-issued Photo ID.
These are additional Schedules in 1040 requiring additional fees
This is where you deduct medical expenses, home mortgage interest, real estate taxes, income tax, sales tax, property tax (auto registration tax), donations, gambling losses etc..
*Note: If you itemized last year, you may not have to itemize this year if your standard deduction is higher.
This is Self-employment Revenue minus Business Expenses = Taxable Income
Interest and Dividend Income (Example Stocks)
Rental Revenue minus Rental Expenses + Taxable Income