If you itemize you will also see the elimination of some miscellaneous itemized deductions like unreimbursed employee expenses under the new law. The law also caps the amount of mortgage indebtedness on new home purchases on which interest can be deducted at $750,000 down from $1,000,000 in current law. In the past, these taxes have generally been fully tax deductible. If you claim itemized deductions you may see fewer tax deductions that lower your tax liability especially if you live in a state with high property taxes since the new law limits the amount of state and local property, income, and sales taxes that can be deducted to $10,000. Under the new law, this percentage is expected to decrease. These increases mean that fewer people will itemize. Married couples filing jointly will see an increase from $12,700 to $24,000. Single taxpayers will see their standard deductions jump from $6,3 taxes to $12,0 taxes (the ones you file in 2019). If you normally claim the standard deduction you may see less tax liability in 2018 since the new tax law nearly doubles the standard deduction amount. Tax credits are a direct reduction from the taxes you owe so they mean more than a deduction that reduces taxable income. Finally, it raises the income threshold at which these benefits phase out from $110,000 for a married couple to $400,000. The law also adds a new, non-refundable credit of $500 for dependents other than children. In addition, the amount that is refundable grows from $1,100 to $1,400. A Family with KidsĪlthough there was an elimination of the dependent exemption deduction beginning for tax year 2018, families with kids may see a bigger tax refund next year since the child tax credit doubled and went from $1,000 to $2,000. So just what will these changes mean for your 2018 tax refund? Here is a break down based on your individual tax situation. Increased expense limits for capital assets.20% deduction for “pass-through” entities (sole proprietorship, partnership, S corp.).$10,000 cap on the deduction for state income taxes, sales, and local taxes, and property taxes combined.Elimination of some itemized deductions.
Elimination of dependent and personal exemptions.Some of the highlights for taxpayers include: Overall, the changes associated with the new tax law may lower taxes for individuals and small businesses. For most people, these tax changes impact tax year 2018 (the taxes you file in 2019) and not tax year 2017 returns. The new tax law is the largest piece of tax reform legislation in 30 years and was signed into law on December 22, 2017. We know that you work hard for your money and often a tax refund may be the biggest check you get all year, so we’re here to let you know how the new tax reform legislation may affect your tax refund next year.
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