Friday, January 4, 2019

WHAT’S NEW FOR 2018 TAX FORMS - FEDERAL

There is a multitude of changes to the tax forms and tax law for 2018 on the federal level.

The big change with the federal Form 1040 is that the old well-crafted Form 1040 is replaced with the ridiculous new “postcard” 1040 and 6 new supplementary schedules - probably the stupidest thing I have ever seen in my almost 48 years in the tax preparation business.  There is no 2018 Form 1040A or Form 1040EZ.

As for tax law, here is a comparison of 2018 and 2017 tax law to show some of what is new for individual income taxes 2018.

ITEM
2018 TAX LAW
2017 TAX LAW

                                            
                                           
TAX RATES
10%, 12%, 22%, 24%, 32%, 35%, 37%
10%, 15%, 25%, 28%, 33%, 35%, 39.6%
STANDARD DEDUCTION
Single- $12,000
Married Joint- $24,000
Married Separate- $12,000
Head of House- $18,000
Single- $6,350
Married Joint- $12,700
Married separate- $6,350
Head of House- $9,350
PERSONAL EXEMPTION
No deduction for personal exemptions.
$4,050
ALIMONY
Deductible by payer and included in income of recipient.
Deductible by payer and included in income of recipient.
MOVING EXPENSE
Deduction for military moves only.
Deduction for job-related moves.
MEDICAL EXPENSES
Allowed in excess of 7½ % of AGI.
Allowed in excess of 7½ % of AGI.
TAXES
Combined deduction limited to $10,000 ($5,000 if filing separate).
Full deduction for all state and local income or sales taxes, property taxes, and personal property taxes.
MORTGAGE INTEREST
Only interest on acquisition debt of up to $500,000 is deductible. Grandfathering for existing loans of up to $1 Million of debt.  
Interest on acquisition debt of up to $1 Million and home-equity debt of up to $100,000 deductible.
INVESTMENT INTEREST
Deductible to extent of investment income.
Deductible to extent of net investment income.
CHARITABLE CONTRIBUTIONS
Fully deductible up to 60% of AGI.
Fully deductible up to 50% of AGI.
CASUALTY AND THEFT LOSS
Only casualty losses from Presidentially-declared disaster areas are deductible.
All casualty and theft losses are deductible.
EMPLOYEE BUSINESS EXPENSES
Not deductible.
Deductible to extent total miscellaneous expenses exceeds 2% of AGI.
INVESTMENT EXPENSES
Not deductible.
Deductible to extent total miscellaneous expenses exceeds 2% of AGI.
TAX PREPARATION COSTS
Not deductible.
Deductible to extent total miscellaneous expenses exceeds 2% of AGI.
LEGAL FEES RELATED TO INCOME
Not deductible.
Deductible to extent total miscellaneous expenses exceeds 2% of AGI.
GAMBLING LOSSES
Deductible to extent of reported winnings.
Deductible to extent of reported winning.
TOTAL ITEMIZED DEDUCTIONS
Deducted in full – no limitation.
Deduction limited based on AGI.
CHILD TAX CREDIT
Up to $2,000 for each child under age 17, based on AGI. AGI threshold substantially increased. Up to $1,400 is refundable.
Up to $1,000 for each child under age 17, based on AGI.  Full amount deductible.
DEPENDENT CREDIT
Up to $500 for each dependent not eligible for the Child Tax Credit, based on AGI (same threshold as Child Tax Credit). No credit for taxpayer or spouse. 
Does not exist.  No credit allowed.
SHARED RESPONSIBILITY PENALTY
Adequate health insurance coverage required for entire household.
Adequate health insurance coverage required for entire household.
ALTERNATIVE MINIMUM TAX EXEMPTION
Single/Head of House- $70,300
Married Joint- $109,400
Married Separate- $54,700
Single/Head of House- $54,300
Married Joint- $84,500
Married Separate- $42,250
ALTERNATIVE MINIMUM TAX EXEMPTION PHASE OUT BEGINS
Single/Head of House- $500,000
Married Joint- $1 Million
Married Separate- $500,000
Single/Head of House- $120,700
Married Joint- $160,900
Married Separate- $80,450
KIDDIE TAX
Calculated separately using tax rate schedule for estates and trusts.
Calculated based on income of parents.

Information on what is new for 2018 for New Jersey and New York to follow.

TTFN











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