Individual Income Tax for Tax Year 2018


Prepare for Changes

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. 

Standard Deduction Nearly Double

Couples:  $24,000.00

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.

No More Personal Exemptions

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.

Schedule A Deductions Affected

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.

Obamacare Individual Mandate on the Way Out

The requirement that taxpayers have health insurance, qualify for an exemption, or pay a fine is repealed for post-2018 years.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.

Child Tax Credit

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.

Tax Preparation Fees