The Offices of Garytaxman and Son, LLC

2018 Tax Update

1. Each level of income will see a reduction in their top marginal rate;

2. Exemption amounts are being reduced to zero. For a majority of the returns we prepare each individual on the return, including children, have a $4,050 exemption from taxable income. That amount is being reduced to zero for all individuals on the return;

3. Standard deductions are being increased from $6,500 for single individuals and married individuals filing separately to $12,000; $9,550 for heads of household to $18,000; and $13,000 for married individuals to $24,000;

4. Child tax credit is increased from $1,000 per qualifying child under the age of 17 to $2,000 per qualifying child. Previously the credit phased out by $50/$1000 of Adjusted Gross Income over $75,000 for single filers, $110,000 for married filers, and $55,000 for married individuals filing separately. The new phase out amounts have been increased to $400,000 for married taxpayers filing jointly and $200,000 for all other taxpayers;

5. State and local tax deductions are being capped at $10,000 for the aggregate of State and local property taxes and state and local income taxes. This cap will not apply to taxes paid or accrued in carrying on a trade or business;

6. There is a temporary reduced threshold for medical expense deductions to 7.5% of income for all taxpayers. This expires at the end of 2018;

7. Alimony and separate maintenance payments will no longer be deductible by the payor and included as income of the payee for any new divorce executed after 12/31/18;

8. Miscellaneous itemized deductions will no longer be allowed.

9. Moving expenses deduction is suspended for all non military taxpayers;

10. The Affordable Care Act Individual Mandate has been repealed;

11. Taxpayers may draw on their 529 accounts up to $10,000 to pay for elementary or secondary public, private, and religious school tuitions;

12. Alternative Minimum Tax is triggered at higher income levels.

Still have questions?  Visit our links page for additional resources or our contact page to get in touch with us.