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Tax Reform And You


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With the passage and implementation of the Tax Cuts and Jobs Act (TCJA), comes a lot of changes for taxpayers to wrap their heads around – but we’re up to the challenge.

Even with all the information floating around these days, it’s easy to overlook or misinterpret how the law works. Don’t worry; with this presentation, we'll provide you the important tips and insights surrounding this law.

Published in: News & Politics
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Tax Reform And You

  1. 1. Now that theTax Cuts and Jobs Act (TCJA) is in effect, there are a lot of changes for taxpayers to understand. Luckily for you, “tax” is our second language.
  2. 2. Tax Rate Deductions The focal point of the TCJA is the reduction of individual tax rates. While the number of tax brackets have remained at seven, each rate has slightly decreased with accompanying charges to the base rates. These tax rates are progressive, meaning the taxes you pay will increase as your income increases.
  3. 3. Tax Rate Deductions Rates Under TCJA Single Return 10 Percent 12 Percent 22 Percent 24 Percent 32 Percent 35 Percent 37 Percent $0 to $9,525 $9,525 to $38,700 $38,701 to $82,500 $82,501 to $157,500 $157,501 to $200,000 $200,001 to $500,000 More than $500,000 $0 to $19,050 $19,051 to $77,400 $77,401 to $165,000 $165,001 to $315,000 $315,001 to $400,000 $400,001 to $600,000 More than $600,000 Married Filing Joint
  4. 4. Standard Deduction The standard deduction increases across the board. Married Filing Jointly/Surviving Spouse: $24,000 Heads of Household: $18,000 Single: $12,000 Married Filing Separately: $12,000 The deduction for the elderly and the blind remains and unchanged and is added to the standard deduction. Personal Exemption The TCJA repealed the personal exemption and changed the filing requirements. Now, you won’t have to file until your gross income for the year exceeds the standard deduction. The rules for withholding income tax is adjusted to reflect this change.
  5. 5. Itemized Deductions The TCJA has altered itemized deductions with some being completely eliminated. Pease Limitation: The Pease Limitation has been totally repealed (until 1/1/2026) Medical Expenses: Home Mortgage Interest: Only mortgage interest to acquire, construct or improve a primary residence or second home is included in the deduction. Also, acquisition indebtedness is now $750,000 for new mortgages, and special rules apply to home equity indebtedness. For 2018, medical expenses are deductible once they exceed 7.5 percent of adjust gross income. In 2019, the threshold will jump up to 10 percent of adjusted gross income.
  6. 6. Alternative Minimum Tax The Alternative Minimum Tax (AMT) is calculated using a different set of tax rules. Per AMT rules, the taxpayer is responsible for whatever is higher, AMT or regular income tax. Overall, the calculation rules have remained the same, but the exemption and phase-out amounts have been modified.
  7. 7. Married Filing Joint Single or Head of Household Married Filing Separate Filing Status AMT Exemption Amount AMT Phase-Out $109,400 $70,300 $54,700 $1,000,000 $500,000 $500,000 Alternative MinimumTax
  8. 8. Under theTCJA, the child tax credit will double to $2,000 per qualifying child under the age of 17, with up to $1,400 being refundable for those who don’t fully utilize the $2,000 per child. Additionally, the credit will be available to more households because of the boost to the phase-out thresholds. ChildTax Credit
  9. 9. Child Tax Credit Tax Filing Status Maximum Adjusted Gross Income for Full Credit Adjusted Gross Income Where Credit Disappears (Depends on # of children) Married Filing Jointly Single Head of Household Married Filing Separately $400,000 $200,000 $200,000 $200,000 Greater than $440,000 Greater than $240,000 Greater than $240,000 Greater than $240,000
  10. 10. Other Important Provisions The following rules will also have a substantial effect on individual filers: The 529 College Savings Plan will continue to be withdrawn tax-free if used for higher education expenses. Now, $10,000 per year can also be used to help pay for elementary or high school education at private and religious schools. Like-kind exchanges are limited to real property not available for sale. The Chained Consumer Price Index for All Urban Consumers will be the indicator for any adjustments. This will ultimately result in a slower adjustment for items based on the inflation rate.
  11. 11. Many of the provisions in theTCJA, including the standard deduction, are slated to sunset in 2025. It’s always in your best interest to work with a credentialed tax professional to help identify long-term tax saving solutions that work for you. Learn more about Rea & Associates and sign up to receive more insights at