2018 Individual Tax Changes
There are lots of changes for income taxes for 2018. One thing we did at Elias Strauss CPAs when we completed the 2017 tax returns was to prepare an extra report showing what the impact would be if the client was following all the new changes. Here are a few of the individual changes:
- Personal and dependent exemptions are eliminated. This would have been $4,150 per person if it wasn’t eliminated.
- Standard deductions were increased dramatically:
- Married Filing Joint is $24,000 (compared to old law of $13,000)
- Head of Households is $18,000 (compared to old law of $9,550)
- Single and Married Filing Separately is $12,000 (compare to old law of $5,500)
- Itemized deduction have many changes:
- The medical expense deduction is allowed for the excess of 7.5% of adjusted gross income (AGI) for 2018.
- Personal casualty and theft losses are eliminated other than disaster losses.
- Charitable contribution limits are increased from 50% to 60%.
- Miscellaneous itemized deductions are eliminated.
- State and local taxes are now limited to a total deduction of $10,000. This includes state and local income taxes as well as property taxes. In Missouri, this includes real estate taxes and personal property taxes.
- Mortgage interest deductions are now only allowed on mortgages of up to $750,000 of acquisition debt after December 15, 2017 (compared to old law of $1,000,000). The deduction for interest paid on home equity loans is eliminated unless the money is used to buy, build or substantially improve the home of the taxpayer.
- There are new tax rates which are slightly lower ranging from 10% to 37%.
- Child tax credits (for children under age 17) are doubled from $1,000 to $2,000 per child. This will phase out for taxpayers with income over $400,000 (compared to $110,000 under the old law).
These are only a few of the many changes that now apply. At Elias Strauss CPAs, we are here to advise our clients on how these may affect you personally and strategies you can use in your specific situation. If you want to make a change in who prepares your tax returns, we offer free consultations for potential clients. Feel free to contact us if this is something you are interested in.