New tax laws were passed by Congress in December of 2017 that could significantly alter your situation for the 2018 tax year.
The Tax Cuts and Jobs Act may result in a big difference in your refund or if you are going to owe money for your 2018 taxes.
The IRS makes changes each year, including cost-of-living adjustments for retirement savings and inflation changes for certain tax provisions.
News reports have indicated that many people who have received refunds in the past, are now owing money to the IRS due to the new changes!
Although these changes have been promoted as being simple, there are many new changes that a professional is best able to help you to get the best outcome this year and to plan for next year.
Here are some of the most prominent changes that could affect you:
Standard deductions
Those who are married and filing jointly will have an increased standard deduction of $24,000, up from the $13,000 it would have been under previous law.
Single taxpayers and those who are married and file separately now have a $12,000 standard deduction, up from the $6,500 it would have been for this year prior to the reform.
For heads of households, the deduction will be $18,000, up from $9,550.
Personal exemption
The personal exemption has been eliminated with the tax reform bill.
Top income tax rate
A new 37 percent top rate will affect individuals with incomes of $500,000 and higher. The top rate kicks in for married taxpayers who file jointly at $600,000 and up.
The new tax law also includes changes to other tax brackets.
Estate tax
The estate exemption doubles to $11.2 million per individual and $22.4 million per couple in 2018.
Child tax credit
The child tax credit has been raised to $2,000 per qualifying child, those who are under 17, up from $1,000. A $500 credit is available for dependents who do not get the $2,000 credit.
Mortgage interest
The deduction for interest is capped at $750,000 for mortgage loan balances taken out after Dec. 15 of last year. The limit is still $1 million for mortgages that were established prior to Dec. 15, 2017.
State and local taxes
The itemized deduction is limited to $10,000 for both income and property taxes paid during the year.
Retirement Saving Savings limits have also been changed, you should consult with your financial advisor concerning this.
About Ale’s Tax & Bookkeeping Service
Pat Ehle is a tax preparer in Liverpool and treats everyone fairly with reasonable prices based on services needed. Technology is a driving force in his business to keep prices reasonable. Encrypted email is used exclusively. Electronic data capture is being used successfully, as well. Because data security is vital, a secure network firewall is used for essential data transmission.
Pat started doing taxes for friends and family twenty-two years ago. In 1997, he started preparing taxes professionally for one of the national tax firms. In 2014, at the end of that tax season, he decided to go into business for himself as he wanted to keep clients’ prices more reasonable. Ale’s Tax & Bookkeeping Service, LLC was formed in July of 2015. H. Pat Ehle, who is the sole owner, gained many referrals from a retiring tax preparer and these happy customers have generated more referrals to his business.
Pat previously was a licensed financial advisor and now is a Licensed Tax preparer. He has been taking continuing education tax classes with the local chapter of NAEA (National Association of Enrolled Agents). He has been taking classes to become an Enrolled Agent and plans to take the certification test later this year, now that his tax business is his primary focus. The IRS grants different access to different classes of professionals. Licensed Agents are able to prepare and file all necessary tax forms and can represent you with a Power of Attorney. The next step up is an Enrolled Agent, who can do more complicated tax forms and representation. CPAs and Attorneys handle the most complex tax cases.
Pat can help you unravel the new tax law for this year and to help you prepare for next year. Call today to make an appointment.
