Oct 9, 2018
If ever a year required close attention to tax planning,
tax year 2018 is it. The Tax Cuts and Jobs Act of 2017 delivered the most extensive tax changes in the last 30 years. As a result, filing your 2018 taxes may be even more complex and time-consuming.
Angela compiled a summary of some of the more important elements of the new law and how they impact individuals and businesses.
In tax year 2018, most taxpayers will benefit from lower tax rates and expanded income brackets. Congress passed some new deductions but took away others. They also didn't make the changes to individual taxes permanent - most will expire after 2025.
Congress did decide to make the latest business tax changes permanent, and they are historic in scope. Corporate income taxes are down dramatically. Owners of S corporations and other business entities will see a potentially large tax reduction on their pass-through income
The estate tax, aka the "Death Tax" is a tax levied on significantly large estates that are passed down to heirs.
Old- Estates up to $5.49 million in value were exempt from the tax.
The top tax rate was 40 percent
New- Doubles the exemption for the estate tax. Now, estates up to $11.2 million are exempt from the tax.
Miscellaneous Tax Deductions
Taxpayers can take the miscellaneous tax deduction if the items total more than 2 percent of their adjusted gross income. The amount that's deductible is the amount that exceeds the 2 percent threshold. These are some of the major changes coming to the miscellaneous tax deduction.
Tax preparation: Taxpayers can today claim an itemized deduction of the amount of money they pay for tax-related expenses, like the person who prepares their taxes or any software purchased or fees paid to fee to file forms electronically.
Tax preparation: Taxpayers may not claim tax-preparation expenses as an itemized deduction through 2025
Work-related expenses: Under current law, workers can deduct unreimbursed business expense as an itemized deduction, like the cost of a home office, job-search costs, professional license fees and more.
Work-related expenses: The bill suspends work-related expenses as an itemized deduction through 2025.
Investment fees: Taxpayers can currently deduct fees paid to advisors and brokers to manage their money.
Investment fees: Under the new rules, the investment fee deduction is suspended until 2025.
State and Local Tax (SALT) Deduction
Old- Taxpayers may include state and local property, income and sales taxes as itemized deductions
New- Taxpayers are limited to claiming an itemized deduction of $10,000 in combined state and local income, sales and property taxes, starting in 2018 and running through 2025. Taxpayers cannot get around these limits by prepaying 2018 state and local income taxes while it is still 2017.
Old- Current law allows taxpayers to deduct moving expenses as long as the move is of a certain distance from the taxpayer's previous home and the job in the new location is full-time.
New- The new tax bill suspends the moving expense deduction through 2025. Until then, taxpayers are not permitted to deduct moving expenses.
Moving-related deductions and exclusions remain in place for members of the military.
Personal Casualty or Theft
Old- Under current tax law individuals can deduct uninsured losses above $100 when property is lost to a fire, shipwreck, flood, storm, earthquake or other natural disaster. The deduction is allowed as long as the total loss amounts to greater than 10 percent of the taxpayer's adjusted gross income.
New- The new tax bill only allows taxpayers to claim the deduction if the loss occurred during a federally declared disaster, through 2025.
Lot's so if you really want to know go over to Angela's site.