Who is most affected by major tax reform changes?
Posted on March 5, 2019
Change can be a little upsetting. Especially when it is a change in tax structure that impacts virtually every taxpayer.
If you have not yet completed your 2018 tax return and are worried about what new tax regulations will mean to you this tax season, don’t get worried. Instead, get information.
The IRS has set up an informative 2018 Tax Reform Basic series called the Tax Time Guide, a resource to help taxpayers file an accurate tax return. You can also access help at IRS.gov by downloading Publication 17, the tax reform information page. IRS.gov/getready, Publication 5307 is another great consumer resource.
According to Teipen Selanders Poynter & Ayres, key 2018 Tax Reform changes include:
- Tax brackets have been lowered. For 2018 taxes (those due in April of 2019), there are just seven income tax brackets, ranging from 10 to 37 percent.
- The standard deduction used by most taxpayers is double what it was last year. For 2018, the basic standard deduction is $12,000 for singles, $18,000 for heads of household and $24,000 for married couples filing a joint tax return.
- Higher deduction amounts apply to people who are blind or taxpayers age 65 or over.
- The increased standard deduction, coupled with other changes, mean that more than half of those who itemized their deductions – for mortgage interest, charitable contributions and state and local taxes – in tax year 2017, may instead take the higher standard deduction in 2018.
- The Child Tax Credit doubled, and more people now qualify. The maximum credit is now $2,000 for each qualifying child under age 17. Plus, the income limit for getting the full credit is $400,000 for joint filers and $200,000 for other taxpayers.
- A new $500 credit is also available for each dependent who does not qualify for the Child Tax Credit. This includes older children and qualifying relatives, such as a parent.
- Some deductions have been limited or discontinued. For example, the state and local tax deduction is limited to $10,000 ($5,000 if married and filing a separate return), and new limits apply to mortgage interest.
- The miscellaneous itemized deduction for job-related costs and certain other expenses is no longer available, and
- Personal and dependency exemptions have been suspended. This means that an exemption can no longer be claimed for a tax filer, spouse and dependents.
Many taxpayers have questions about this year’s tax preparation. In order to make sure all your questions are answered, Teipen Selanders Poynter & Ayres CPAs want to make sure you allow more time for tax preparation this year.
Call us soon to begin taking care of your 2018 tax return. Our CPAs will make sure you get every deduction available – and all your concerns addressed.