Major tax law changes affect every taxpayer filing a 2018 tax return this year. To help taxpayers understand these changes, the IRS created several resources that are available on IRS.gov.
Here’s a quick overview of key changes with a link to more information on IRS.gov:
Tax rates lowered. Starting in 2018, tax rates are lower for most income brackets. The seven rates range from 10 percent to 37 percent.
- Check out this resource: Publication 5307, Tax Reform Basics for Individuals and Families (PDF)
Standard deduction nearly doubled. For 2018, the basic standard deduction is $12,000 for singles, $18,000 for heads of household and $24,000 for married couples filing a joint tax return. Higher amounts apply to people who are blind or at least age 65. Along with other changes, this means that more than half of those who itemized their deductions in tax year 2017 may instead take the higher standard deduction on their 2018 tax return.
- Check out this resource: Publication 501, Dependents, Standard Deduction and Filing Information (PDF)
Various deductions limited or discontinued. New limits apply to mortgage interest. Additionally, taxpayers can no longer deduct miscellaneous itemized deductions for job-related costs and certain other expenses. The law also limits the state and local tax deduction to $10,000, $5,000 if married and filing a separate tax return.
- Check out this resource: Instructions for Schedule A, Form 1040 (PDF)
Child Tax Credit doubled, and more people qualify. The maximum credit is now $2,000 for each qualifying child under age 17. The income limit for getting the full credit increased to $400,000 for joint filers and $200,000 for other taxpayers.
- Check out this resource: Publication 972, Child Tax Credit (PDF)
New credit for other dependents. Taxpayers can claim a $500 credit for each dependent who doesn’t qualify for the Child Tax Credit. This includes older children and qualifying relatives, such as a parent.
- Check out this resource: Tax reform
Personal and dependency exemptions suspended. This means that taxpayers filing a tax return can no longer claim an exemption for themselves, a spouse and dependents.
- Check out this resource: Publication 17, Your Federal Income Tax
This article is courtesy of IRS.gov