The new tax law recently signed by the President and called the “Tax Cuts and Jobs Act” is the biggest federal tax change since President Ronald Reagan. It affects everyone in the country, and I will discuss a few of the provisions that will apply beginning in 2018.
The biggest for individuals is the elimination of your personal and dependent exemptions. They are being combined with the new standard deduction which has been raised to $12,000 for single or married filing separate; $24,000 for married filing joint or qualified widow(er); and $18,000 for head of household.
– The Child Tax Credit has increased to $2,000 per qualifying child and the phase-out threshold has been increased. There is a new Family Tax Credit of up to $500.
– Itemized deductions for home equity interest are no longer allowed.
– Itemized deduction for miscellaneous itemized deductions subject to the 2% floor no longer allowed.
– Unless we have a federally declared disaster, personal casualty loss and thefts are no longer deductible.
– No more moving expense deduction and income exclusion unless you are a member of the armed forces (or spouses or dependents).
A big one: alimony will no longer be deductible by the payer or includible in income by the recipient for any agreement entered into after 12/31/18.
Effective for 2019, the payment you must make for not having medical insurance is a big 0.
The withholding tables have also changed, so you should be seeing an increase in your paycheck sometime in February.
Major items for small businesses are:
– C corporations will be taxed at a flat rate of 21%.
– If you have net operating losses in your C corporation, they will be limited to 80% of taxable income.
– If you have income from a partnership, S corporation, or sole proprietorship, you generally may deduct 20% of the qualified business income.
This article is just a brief overview and general information about the new tax law. You should consult with your tax advisor as to how it impacts your taxes.
Michael L Crosa CPA, practices in the West Kendall Area.
Specializing in individual, small business and offering full service accounting using QuickBooks.
12485 SW 137th Ave. Ste 212, Miami, FL 33186
T: 305-773-0702 | F: 305-574-7814
By appointment only
Mcrosacpa@businessprofits.com | www.businessprofits.com
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