The New Tax Reforms and Your Tax Returns

tax reform barton CPABe aware… your 2018 tax returns will look very different from previous years! This year has ushered in the United States’ biggest tax reform law in more than thirty years. The team at barton CPA has been studying and delving deep into the new tax reform bill and here is an overview of the areas that might affect you.

TIP: Don’t try to do your taxes alone! These changes are multi-leveled and tricky. Let our team help you through the process for one low rate. Call today and schedule your appointment!

Tax rate changes: Both individual and corporate rates have changed. The maximum individual rate is reduced to 37% and the corporate rate is now a flat 21%. The rate change could benefit you, or in some cases, raise your tax liability.

Standard deduction increases: Personal exemption deductions have been eliminated.

Increased Child Tax Credit and new Dependent Credit: The credit has increased for each child to $2,000, of which $1,400 per child is now refundable. In addition, each non-child dependent can now receive a $500 credit. You, however, will have no exemption credit or deduction for yourself, your spouse, or your dependents.

The phase out thresholds for these credits have drastically increased. Married taxpayers filing a joint return can claim the full credits if their adjusted gross income is $400,000 or less ($200,000 for all others). The credits are fully phased out for married taxpayers filing a joint return when their adjusted gross income reaches $440,000 ($240,000 for all others). This means more taxpayers will be able to claim these credits in 2018.

questioDisappearing deductions: Beginning with the 2018 tax year, you will no longer be able to deduct:

  • State income tax and property taxes above $10,000 per year in total;
  • Moving expenses (with an exception for certain military);
  • Employee business expenses such as mileage, travel, entertainment, home office expenses, union dues, tax preparation fees, and investment fees, among others;
  • Mortgage interest beyond interest on $750,000 of acquisition debt, if you purchase a new home; and
  • Mortgage interest paid on equity debt

Some new benefits for individuals: These new benefits include:

  • The medical expense AGI threshold will temporarily drop to 7.5% of AGI for 2017 and 2018;
  • The AMT threshold is increased, so fewer middle-income taxpayers will be subject to AMT;
  • The estate tax exclusion has nearly doubled to $10 million; and
  • The annual gift tax exclusion remains the same ($14,000 for 2017 and $15,000 for 2018), but the maximum rate on gifts is 35%.

TaxdogBartonSmall business benefit: Beginning in 2018, there will be up to a 20% deduction from net business income for a sole proprietorship, LLC (excluding those taxed as a C corporation), partnership, S corporation, and rental activity. The new rules are complex and barton CPA is prepared to help you maximize this deduction.

Barton CPA is staying current and up-to-date on all changing tax laws. Set up your appointment today.

Contact us via email at This email address is being protected from spambots. You need JavaScript enabled to view it. or call 760.969.6499 so we can help you navigate these complex changes.

 

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