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Assessing the tax law changes for 2018

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Mary Currie

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BY MARY CURRIE
Business Columnist

Monday, January 8, 2018

The majority of the changes in the tax bill recently signed into law ef­fect 2018 and for­ward. Below are just a few of the changes made some pos­i­tive and some not so much.

Below are just a few of the changes made — some positive and some not so much.

Standard Deduction Amounts for 2017 and 2018 are single, $ 6,350 to $12,000; married filing jointly, $12,700 to $24,000; head of household, $9,350 to $18,000; and married filing separate, $ 6,350 to $12,000.

However, the Personal Exemption Amount for individuals for 2017 of $4,050 has been repealed — so after 2017, there will not be any deduction for personal exemptions, zero.

The individual tax rates for 2017 range from 10 percent to 39.5 percent; for 2018 they range from 10 percent to 37 percent. It will help that they decided to keep the 10 percent bracket. The corporate tax rate is a flat 21 percent for years starting Jan. 1, 2018.

The threshold to claim medical expense deduction for 2017 and 2018 is 7½ percent of adjusted gross income.

The health care mandate penalty is repealed beginning 2019.

The 2018 mileage rates are business: 54.5 cents, medical: 18 cents and charity 14 cents per mile.

Under the new tax bill there were limits made to itemized deductions for 2018 and forward to Dec. 31, 2025.

There are caps on mortgage interest deductions, limits on state and local tax deductions and limits on theft and casualty losses — under the new tax bill this will only be available for federally declared disaster losses.

Most of the miscellaneous deductions subject to the 2 percent of adjusted gross income were repealed. Some examples of these deductions are unreimbursed employee business expenses such as tools, travel, uniforms and union dues.

There is also repeal for the alimony payment deduction, for the payer, and income to the receiver for divorce or separation documents executed after 2018.

Charitable contributions limits after 2017 are increased to 60 percent of adjusted gross income.

The rules known as “kiddie tax” for year 2018 children will be tax on their unearned income using the trusts and estates tax rate schedules. Their earned income will be taxed using single tax rates.

Education 529 plans were expanded to allow up to $10,000 in tuition expenses for a designated beneficiary at a private, public or religious elementary or secondary school for years after 2017.

The estate tax exemption amount for 2017 was $5,490,000 and for 2018 it is $11,200,000.

This includes just a few of the changes in the tax bill; I will discuss more in future columns.

The information in this article is general in nature and should not be acted upon without first checking to determine its applicability to your situation.

Mary Currie is a certified public accountant practicing in Rocky Mount.

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