Provided by: Monica J. Sedillo, CPA
The Tax Cuts and Jobs Act was signed into law on December 22nd.
Here is a summary of the tax law changes regarding Individual Tax Returns,
which are effective with tax years beginning January 1, 2018.
Individuals
- New Income Tax Brackets
- Married Filing Jointly
i.
10% Not over $19,050
ii.
12% $19,050 - $77,400
iii.
22% $77,400 - $165,000
iv.
24% $165,000 - $315,000
v.
32% $315,000 - $400,000
vi.
35% $400,000 - $600,000
vii.
37% Over $600,000
- Single
i.
10% Not over $9,525
ii.
12% $9,525 - $38,700
iii.
22% $38,700 - $82,500
iv.
24% $82,500 - $157,500
v.
32% $157,500 - $200,000
vi.
35% $200,000 - $500,000
vii.
37% Over $500,000
- Head of Household
i.
10% Not over $13,600
ii.
12% $13,600 - $51,800
iii.
22% $51,800 - $82,500
iv.
24% $82,500 - $157,500
v.
32% $157,500 - $200,000
vi.
35% $200,000 - $500,000
vii.
37% Over $500,000
- Married Filing Separately
i.
10% Not over $9,525
ii.
12% $9,525 - $38,700
iii.
22% $38,700 - $82,500
iv.
24% $82,500 - $157,500
v.
32% $157,500 - $200,000
vi.
35% $200,000 - $300,000
vii.
37% Over $300,000
- Standard Deduction Increased
- Single $6,500 - $12,000
- Married Filing Separately $6,500 - $12,000
- Head of Household $9,550 - $18,000
- Married Filing Jointly $13,000 - $24,000
- Personal Exemptions Suspended
- Capital Gains Rates Set at 0%, 15% and 20%
- New Deduction for Pass-through Entities (i.e.
S-Corporation and Partnership Income)
- 20% deduction (with limitations)
i.
50% of W-2 wages, or
ii.
25% of W-2 wages paid plus 2.5% of the unadjusted basis of
“qualified property”.
iii.
Phases out beginning at AGI of $315,000 for MFJ, $157,500 for
others
- Child Tax Credit Increased
- Increased to $2,000 per Child
- Phase Out increased to AGI of $400,000 MFJ and
$200,000 for all others
- $500 nonrefundable credit provided for certain
non-child dependents
- Up to $1400 per qualifying child is refundable
- State, local and foreign property taxes (including
sales tax) are only deductible by businesses.
- Miscellaneous Itemized Deductions Suspended (i.e. Tax
Preparer Fee)
- Limitation on total Itemized Deductions Suspended
- Threshold for deducting Medial Expenses is reduced from
10% of AGI to 7.5% of AGI.
- Individual Shared Responsibility Payment (Obamacare
Penalty) has been repealed.
- The Act leaves intact the 3.8% net investment income
tax and the 0.9% additional Medicare tax, both enacted by Obamacare.
- Alternative Minimum Tax Exemption Increased
- For joint returns and surviving spouses, $109,400.
- For single taxpayers, $70,300.
- For married filing separately, $54,700.
- Expanded Use of 529 Account Funds - “Qualified higher
education expenses” include tuition at an elementary or secondary public,
private, or religious school.
This is just a summary, and there are more changes that may or may not directly affect you. There will be clarifications coming from
the IRS on many of the changes as the year continues. Please feel free to
contact your personal CPA with questions, clarification, or validation.
Thanks to our personal accountant for supplying this valuable summary! If you do not have a CPA, or looking for a change, I highly recommend Monica - she has been our CPA for many years. She can be reached at:
Monica J. Sedillo, CPA
P.O. Box 3211
Lake Jackson, TX 77566
Phone: (979) 533-7760
Fax (979) 234-0523
