Biggest Tax Changes in IRS Newly Updated Provisions For 2018
The day has come: the Internal Revenue Service (IRS) finally unveiled a series of updated tax-related provisions for 2018, something we have been waiting forever since U.S. President Donald Trump signed the tax reform into law late last year.
Our Fort Lauderdale tax law attorney Ira Zuckerman has reviewed the new provisions, which include newest tax tables for 2018. There are quite a few changes compared to the pre-Trump era. Today, we have outlined the biggest tax changes spurred by the tax reform 2018.
Note: you will be using these numbers and new provisions to file your 2018 tax return in 2019.
Tax rates and standard deduction amounts
The tax reform 2018 has brought many changes, but arguably one of the biggest are changes to the tax brackets and tax rates. According to the newly updated IRS provisions, there are still seven tax rates: 10%, 12%, 22%, 24%, 32%, 35% and 37%, plus a zero rate.
In 2018, there will be substantial increases in the standard deduction amounts (SDA), including to $12,000 for individuals, $18,000 for heads of households, and $24,000 for married couples filing jointly (or surviving spouses).
The standard deduction amount has also been increased for the aged, blind, and unmarried taxpayers. For the aged or blind, the additional SDA is $1,300. The amount of expenses that can be subtract by unmarried taxpayers from their taxable income, meanwhile, has been increased to $1,600.
For a dependent who can be claimed by another taxpayer, the SDA is limited to no more than $1,050 or earned income plus $350.
Personal exemptions in 2018
After the tax reform 2018, there will no longer be personal exemption amounts. If you are an unmarried, individual taxpayer, you will have to file your tax returns if your gross income for the taxable year is greater than the amount of the standard deduction.
If you are a married taxpayer filing jointly with your spouse, you will have to file your tax returns if your gross income plus the gross income of your spouse is greater than the amount of the standard deduction for a joint return (see above). Our Fort Lauderdale tax law lawyer at the Zuckerman Law, LLC warns, however, that there are a few exceptions: you are required to file a tax return jointly only if you and your spouse lived in the same home in the taxable year; your spouse has not filed a separate tax return; neither you nor your spouse is claimed as a dependent of another taxpayer who has filed a separate tax return.
Tax credits and deductions
The tax reform 2018 has also altered tax credits and deductions. According to the new provisions by the IRS, the child tax credit has risen to $2,000 per qualifying child (under 17), and allows parents to receive up to $1,400 as a refund. Child tax credit is subject to phaseouts. There is also a temporary $500 nonrefundable credit for other qualifying dependents.
In 2018, the maximum Earned Income Tax Credit (EITC) amount is now $6,431, and is available for taxpayers filing jointly who have three or more children under 17. As for the adoption credit, taxpayers are allowed a credit of $13,810 for a child with special needs. The IRS has also reduced the credit allowed for Adoption Assistance related expenses from $13,840 to $13,810 in 2018.
Reading all these numbers may seem confusing, which is why our tax law attorneys at the Zuckerman Law, LLC are here to help you out and answer your questions. Get a free consultation by calling our Fort Lauderdale offices at 754-201-3536 or fill out this contact form today.