The Tax Cuts and Jobs Act was signed into law by President Trump at the very end of the year in 2017, with the bill set to take effect on January 1, 2019 and covering tax year 2018. This was the largest re-write of the tax code in more than 30 years, so you can expect there to be quite a few changes in the way you prepare your tax returns in Oklahoma City, OK and the kinds of relief and deductions you can expect to benefit from.
Here are just a few examples of some of the elements of the tax code that will be different this year. Please be sure to consult with a tax professional for a more complete sense of how your personal financial picture may change:
- 529 college savings plans: Previously, 529 plans were only able to be used for higher education expenses. Under the new rules, they can now be used for private K-12 education, a change expected to be of great benefit for wealthy families.
- ACA individual mandate: Under the old rule, anyone who did not qualify for an exemption under the Affordable Care Act and chose not to purchase insurance faced potential tax penalties that varied based on income. The individual mandate no longer exists under the new rules. This could lead to increased premium costs as fewer young and healthy people sign up for insurance.
- Alimony: Under the old rules, alimony payments were deductible for the payer and taxable income for the recipient. This switches under the new rules—now the payments are not deductible, and the recipient does not have to claim the money as taxable income.
- Alternate minimum tax (AMT): The old exemption amount for the AMT was $84,500 for married couples filing jointly, $54,300 for individuals and $42,250 for married couples filing separately. Now, married couples filing jointly are exempt starting at $109,400, while $70,300 is the limit for other taxpayers.
- Child tax credits: The previous child tax credits were $1,000 per child under the age of 17, with the credit being reduced by $250 for every $1,000 the taxpayer earns over a certain threshold. The tax credit now doubles to $2,000 per qualifying child, up to $1,400 of which can go toward a tax refund.
- Corporate tax: Previously, there was a four-tiered graduated rate structure for corporate taxes, with the top rate being 35 percent on taxable income of more than $10 million. The new rule permanently reduces that rate to 21 percent.
- Estate taxes: Previously, the exemption limit was $5.49 million for estates to be subject to the estate tax (and twice that for couples). The new rule doubles the exemption for the estate tax for estates of up to $11.2 million.
- Miscellaneous deductions: There are a variety of changes to various other miscellaneous deductions that were commonly taken by tax filers, so be sure to ask your tax preparation specialist for more information.
To learn more about the changes coming under the Tax Cuts and Jobs Act and how you’ll be affected, contact a professional at Chrisman & Chrisman Financial Services about your tax returns in Oklahoma City, OK.
Categorised in: Tax Returns
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