1. The key changes you need to know for the 2018 tax year
2018 Tax Changes
The key changes you need to know for the 2018 tax year
Created by: Emilee Traylor

2. Standard Deductions Filing Status Standard Deduction for 2018
Change
Single
$12,000
$6,350
+$5,650
Married Filing Jointly
$24,000
$12,700
+11,300
Married Filing Separately
Head of Household
$18,000
$9,350
+8,650

3. Personal Exemption
The personal exemption has been eliminated with the tax reform bill.

4. Tax Brackets Tax Rate Single Married Filing Jointly
Married Filing Separately
Head of Household
10%
Up to $9,325
Up to $18,650
Up to $13,350
15%
$9,326 - $37,950
$18,651 - $75,900
$13,351 - $50,800
25%
$37,951 - $91,900
$75,901 - $153,100
$37,951 - $76,550
$50,801 - $131,200
28%
$91,901 - $191,650
$153,101 - $233,350
$76,551 - $116,675
$131,201 - $212,500
33%
$191,651 - $416,700
$223,351 - $416,700
$116,676 - $208,350
$212,501 - $416,700
35%
$416,701 - $418,400
$416,701 - $470,700
$208,351 - $235,350
$416,701 - $444,550
39.6%
$418,401 or more
$470,701 or more
$235,351 or more
$444,551 or more

5. Itemized Deductions Medical and Dental Expenses
The floor has been lowered to 7.5% of your AGI. Before the tax reform the floor was at 10%.
Example: If your AGI is $40,000 and your medical expenses were $5,000. Assuming you itemized, you can now claim $2,000 as a deduction vs. $1,000 before.

6. Itemized Deductions Cont.
State and Local Taxes
All state and local sales, income and property taxes together may not exceed $10,000 ($5,000 for married taxpayers filing separately).
State, local, and foreign property taxes, and sales taxes which are deductible on Schedule C, Schedule E, or Schedule F are not capped.

7. Itemized Deductions Cont.
Home Mortgage Interest
The mortgage used to buy, build or improve your home must be $750,000 or less to qualify for this deduction.
For mortgages taken out before 12/15/2017 the limit is $1 mil.

8. Itemized Deductions Cont.
Charitable Contributions
The limit for cash donations to a public charity increased from 50% to 60%.
Taxpayers are no longer allowed to deduct payments made to a college in exchange for college athletic event tickets or seating rights.
The charitable standard mileage rate remains at 14 centers per mile.

9. Itemized Deductions Cont.
Casualty and Theft losses
You can no longer deduct personal casualty and theft losses UNLESS the loss is attributable to a federal disaster as declared by the president.

10. Itemized Deductions Cont.
Job expenses and Miscellaneous Deductions
The deductions have been eliminated for tax years – 2025.
This included unreimbursed employee expenses and tax preparation expenses.

11. Estate Tax
The estate exemption doubles to $11.2 million per individual and $22.4 million per couple in 2018

12. Child Tax Credit
The child tax credit has been raised to $2,000 per qualifying child, those under 17.
A $500 credit is available for dependents who do not qualify for the $2,000 credit.

13. Contribution Limit for Retirement
Those who participate in retirement plans, such as, 401(k), 403(b) and most 457 plans can now contribute as much as $18,500 this year, a $500 increase from the 2017 limit.

14. IRA’s Single taxpayers phaseout limit is $63,000 - $73,000
Married couples – the phaseout range varies depending on whether the IRA contributor is covered by a workplace retirement plan.
For a spouse who is investing has access to an employer plan, the range is $101,000 - $121,000.
For a spouse who is investing does not have a retirement plan but is married to someone who does, the phaseout is $189,000 - $199,000

15. Roth IRA’s
Individuals who are single or file Head of Household the income phaseout is $120, $135,000
For couples filing Married Filing Jointly the income phaseout is $189,000 - $199,000

16. Education
The new tax bill expands the use of funds saved in a 529 college savings plan to include levels of education other than college.
Meaning if you have children in private school, or you pay for tutoring for your child in the K-12 grade levels, you can use the money in your account for these expenses.

17. Obamacare
TCJA eliminates the Affordable Care Act penalty beginning in tax year 2019!
If you are NOT covered for 2018 you are still expected to pay the penalty!

18. Alimoney
Effective for any divorce or separation agreement as of Jan. 1, 2019, The person making alimony payments does not get to deduct them and the recipient does not claim the payments as income.

19. Alternative Minimum Tax
Under the new law – Married couples filing jointly will be exempt from the AMT starting at $109,400. Exemption starts at $70,300 for all other taxpayers.
The exemption phase-out thresholds will rise to $1,000,000 for married couples filing jointly, and $500,000 for all other taxpayers.

20. Moving Expenses
The deduction for moving expenses has been eliminated through 2025.

21. Business Tax Changes

22. For Pass through entities can now enjoy a 20% Business Income Deduction
So if your business’ taxable income was $100,000, then after the 20% deduction, you only have to pay taxes on $80,000

23. Corporate Tax Rate was lowered from 35% to 21%

24. 100% Bonus Depreciation
This allows you to immediately deduct the depreciation in the first year. Originally you were only allowed to deduct 30% of qualifying personal property used for business purposes, like a computer or a car

25. Section 179 Deduction raised to $1,000,000

26. Client Entertainment GONE
This used to be 50% deductible along with meals, but as of 2018 you can no longer deduct expenses for football games, concerts, golf, ect.

27. Meals went from 100% deductible to only 50%
When an employer would bring meals into the office or snacks they were able to deduct 100% of the cost. Under the new law they can only deduct 50%

28. Net Operating losses can only be carried forward
Losses also limited to 80% of taxable income

29. Schedule an Appointment with us today!
Click the link below to schedule an Income Tax Planning appointment!
We would be glad to help you adjust to all the new changes!
Tax Appointment
PO Box 348
40644 Hwy 290 Business
Waller, TX 77484
Office:
Fax:
Gundersons Bookkeeping Webiste
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