2018 Tax Summary — Without all the jargon…
I got this info from the the Tax Man and you can’t get any clearer than this! This information is for when you file your tax return in April 2019.
The below tax table gives you an idea of how much your taxes will be.
The below standard deduction table is how many chips the Tax Man will give you.
Child Tax Credit
The 2018 tax reform bill increases that credit to $2,000 per qualified child and raises the income limits for the credit to $400,000 jointly and $200,000 individually. This means a lot more people will be able to receive the tax credit!
Taxpayers With Children
If you have children, you may have a 529 college savings plan in place. Money you put in the account grows tax-free, but up to now, it could only be used for qualifying college expenses. Now, if you have a 529 savings plan for your child, you can use it for education other than college.
Charitable Donations
In 2017, you could deduct up to half of your income in qualified charitable donations if you itemized your deductions. The new tax reform bill has increased that limit to 60% of your income.
Medical Expenses
Before the new tax reform bill, you could deduct unreimbursed medical expenses above 10%of your adjusted gross income (AGI), which is your total income minus other deductions you have already taken. The new tax reform bill has reduced that to 7.5% of your AGI, which means you can deduct more.
Health Care
The penalty you owe if you don’t get health insurance doesn’t actually take effect until next year. So that means the penalty (which is $695 this year) still applies when you file your 2018 taxes.
Homeowners
In 2018, the maximum mortgage principal in the tax reform bill was lowered to $750,000. But before you worry, know that taxpayers with existing mortgages in between $1 million and $750,000 will be grandfathered into the old deduction. Before this year, you were also allowed to deduct interest paid on home equity debt, up to $100,000. The tax reform bill removed that deduction starting this year.
SALT Deduction
SALT stands for “state and local taxes,” and this deduction addresses whether or not you can deduct state income taxes and/or sales taxes if you decide to itemize your deductions. The new tax reform bill keeps the SALT deduction but limits the total deductible amount to $10,000, including income, sales and property taxes. That means that you might not be able to deduct all of your state and local taxes if you live in a state with high taxes.
Estate Tax Exemption
What’s the estate tax? Basically the estate tax is a tax you pay on inherited money and property. Currently, heirs pay a tax rate of 40% on any inherited property valued over $5.49 million. In the new tax reform bill, you can inherit a total of $11.2 million in your lifetime before you are hit with the 40% tax. I guess a lot of us won’t have this problem!
Other deductions that are gone
Alimony payments
Moving expenses
Parking and transportation reimbursement
Casualty and theft losses (except a federally declared disaster)
Unreimbursed employee expenses
Tax preparation services
This is it and it’s a lot when you look at the bigger picture. It’s time to take our taxes more seriously than ever as the Tax Man is tightening the noose around our necks and making it look like he’s giving us candy!
