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2018 Tax Law Changes (compared to
2017)
The information below is based on my current understanding of the tax law that
was passed December 22, 2017. The IRS is still working on releasing
information and guidance. You can either claim the standard deduction or
itemize deductions, whichever is higher. (Note: Nonresident aliens filing Form
1040NR are generally required to claim itemized deductions).
2017 Tax Return |
2018 Tax Return |
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CLAIMING THE STANDARD
DEDUCTION
Single $6,350
Married Filing Jointly $12,700
Married Filing Separately $6,350
Head of Household $9,350
(Note: The standard deduction is
higher for people born before January 2, 1953). |
CLAIMING THE STANDARD
DEDUCTION
Single $12,000
Married Filing Jointly $24,000
Married Filing Separately $12,000
Head of Household $18,000 |
Deduction for
Personal Exemption
A deduction
reduces your income, not your tax.
Taxpayer, spouse and dependent can claim $4,050 each, subject to the
following phase-outs in adjusted gross income:
Single (beginning at $261,500, phased out completely at $384,000);
Married filing jointly (beginning at $313,800, phased out completely at
$436,300).
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Deduction for
Personal Exemption
Eliminated
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CLAIMING ITEMIZED DEDUCTIONS |
CLAIMING ITEMIZED DEDUCTIONS |
Home Acquisition Debt
(primary plus second home):
Deduct interest paid on mortgages up to $1,000,000. However, if the
loan exceeds $1 million, the next $100,000 of that debt can be treated
as home equity debt. In other words, the $1,000,000 limit is really
$1,100,000.
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Home Acquisition Debt
(primary plus second home):
Loans secured before
12/15/17:
Deduct interest paid on mortgages up to $1,000,000
Loans secured after
12/15/17:
Deduct interest paid on mortgage debt up to $750,000
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Home Equity Debt:
Deduct interest paid on loans up to $100,000.
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Home Equity Debt:
You can only deduct interest paid on home equity debt if the debt was used to
buy, build or substantially improve the taxpayer's home that secures the
loan. The total of the home equity debt plus home acquisition debt
cannot exceed $750,000.
You cannot deduct interest from home equity debt for a second home if the loan is
secured by the main home and not the second home. |
Property Tax
Deduction:
Unlimited. Deduct real estate taxes paid (state, local or foreign) on
real property, including vacant land.
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Property Tax
Deduction:
No deduction for foreign property taxes.
Deduction is limited to $10,000 split between state/local taxes and
property taxes. |
State and Local
Taxes:
Deduct state and local income taxes paid during 2017.
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State and Local Taxes
Deduction is limited to $10,000 split between state/local taxes and
property taxes. |
Medical Expenses.
Can only claim the portion of the out-of –pocket medical expenses that
exceed 7.5% of your adjusted gross income.
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Medical Expenses.
No change. After 2018, medical expenses cannot exceed 10% of AGI. |
Charitable Donations:
Cash and non-cash gifts to qualified charities are deductible.
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Charitable Donations:
No change. |
Job Expenses and
Miscellaneous Itemized Deductions
Can only claim the portion that of the total expenses that exceed 2% of
your adjusted gross income. Includes unreimbursed employee business
expenses, investment advisory fees, safe deposit box fees, tax prep
fees, and more.
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Job Expenses and
Miscellaneous Itemized Deductions
Eliminated.
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Casualty and Theft
Losses
For victims of fire, flood, burglary or similar event. You can only
claim the portion that exceeds 10% of your adjusted gross income.
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Casualty and Theft
Losses
Same rules but you can only claim the losses if the event was declared a
disaster by the president. The loss may be claimed in addition to the
standard deduction.
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Itemized Deduction
Limitation
Your itemized deductions may be limited
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Itemized Deduction
Limitation
The overall limit on itemized deductions is suspended for tax years
2018-2025.
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Child Tax Credit
A credit
reduces your tax, not your income.
$1,000, subject to phase-out beginning with modified adjusted gross
income of:
Single ($75,000), married joint ($110,000).
For each $1,000 of income above the threshold, your available child tax
credit is reduced by $50.
The child can have a SSN or ITIN.
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Child Tax Credit
A credit
reduces your tax, not your income.
$2,000, subject to phase-out beginning with in modified adjusted gross
income of:
Single ($200,000), married filing jointly ($400,000).
The child must have a SSN.
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Moving Expenses
You can claim moving expenses as long as the new
workplace is at least 50
miles farther from the old home than the old job location was from the
old home.
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Moving Expenses
Eliminated (with some exceptions for members of the military).
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529 Plans
You can withdraw the money that you contributed tax-free to pay for
higher education expenses (i.e., college/university).
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529 Plans
In addition to paying for higher education, you can also withdraw up to
$10,000 each year, per child, to pay for private or religious school, or
if you home-school.
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Pass-Through Business
Income
Pass through ordinary income is taxed at normal individual tax rates.
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Pass-Through Business
Income
Individuals can generally deduct 20% of their qualified business income
from a partnership, S corporation and sole proprietorship prior to
applying the personal income tax rates. There are limits, including a
phaseout for the deduction.
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2017 Individual
Income Tax Brackets
Single
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10%: $0 to $9,325
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15%: $9,325 to $37,950
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25%: $37,951 to $91,900
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28%: $91,901 to $191,650
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33%: $191,651 to $416,700
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35%: $416,701 to $418,400
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39.6%: over $418,400
Married
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10%: $0 to $18,650
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15%: $18,651 to $75,900
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25%: $75,901 to $153,100
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28%: $153,101 to $233,350
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33%: $233,351 to $416,700
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35%: $416,701 to $470,700
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39.6%: over $470,700
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2018 Individual
Income Tax Brackets
Single
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10%: $0 to $9,525
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12%: $9,526 to $38,700
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22%: $38,701 to $82,500
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24%: $82,501 to $157,500
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32%: $157,501 to 200,000
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35%: $200,001 to $500,000
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37%: over $500,000
Married
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10%: $0 to $19,050
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12%: $19,051 to $77,400
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22%: $77,401 to $165,000
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24%: $165,001 to $315,000
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32%: $315,001 to $400,000
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35%: $400,001 to $600,000
37%: over $600,000
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AMT Exemption
Single ($54,300), married joint ($84,500)
Alternative Minimum
Tax Exemption Phaseout Threshold
Single ($120,700), married joint ($160,900)
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AMT Exemption
Single ($70,300), married joint ($109,400)
Alternative Minimum
Tax Exemption Phaseout Threshold
Single ($500,000); married joint ($1,000,000)
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Individual Health
Insurance Mandate
Fee for not having insurance is the higher of: (1) 2.5% of household
income (to maximum of total yearly premium of national average of Bronze
plan) or (2) $695 per adult, $347.5 per child under 18 (to maximum of
$2,085).
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Individual Health
Insurance Mandate
Fee is similar to 2017, but the mandate is eliminated in 2019.
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