This is the first article in a four part series of articles about the 2018 tax law changes and how they will affect individual and business returns filed in 2019.
Fundamental to all of the individual changes is an increasing standard deduction which jumps up to $12,000 for single filers and $24,000 for couples filing jointly. Although this may seem like a large increase, it is at least partially offset by the fact that personal exemptions were ELIMINATED.
If you have eligible dependent children the Child Tax Credit has increased to $2,000 and other dependents may be eligible for the new $500 Dependent Tax Credit. This is a substantial increase and also comes with the added bonus that the income phase out limit has increased significantly. So, if you previously lost the Child Tax Credit due to taxable income over the threshold, there is a good chance that you may now be eligible again.
Schedule A itemized deductions will still be a factor for many taxpayers, although there have been radical changes to the rules governing these deductions. Many itemized deductions have been eliminated but three of the most popular, mortgage interest, state income and property taxes, and charitable deductions, all remain; albeit with changes to each one. Let’s look at how each of these have changed:
These are just a few of the many, many ways the tax code has changed. Stay tuned for more throughout the rest of the year.
This is general information and a brief summarization of complicated tax issues which are often subject to many exclusions and limitations. We make every effort to verify the accuracy of all information but we do not guarantee or warranty advice disseminated over the internet. Please give us a call to discuss potential strategies and ensure they make sense for your specific situation.
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