1. 2018 PERSONAL AND BUSINESS INCOME TAX HIGHLIGHTS
Paul Joseph, CPA, CGFM, CFE, CFS

2. Topics:
Changes to:
Standard Deduction
Exemption
Child Tax Credit and new rules for child tax credit
529 College Savings
Moving Expenses
Discharge of Student Loan Debt
Itemized Deductions
Charitable Contribution
Alimony

3. Increasing Standard Deduction:
Filing Status
2017 Standard Deduction
2018 Standard Deduction
Single
$6,350
$12,000
Married Filing Jointly
$12,700
$24,000
Married Filing Separately
Head of Household
$9,350
$18,000

4. Changes to the Personal Exemption
Elimination of Personal Exemption:
Changes to the Personal Exemption
Filing Status
2017 Personal Exemption
2018 Personal Exemption
Single With Income Less Than $261,500
$4,050
Removed
Married Filing Jointly With Income Less Than $313,800
Head of Household With Income Less Than $287,650
Married Filing Separately With Income Less Than $156,900

5. Changes in Child Tax Credit Thresholds
Increase in Child Tax Credit:
Child tax credit has been doubled to $2,000 per qualified child under the age of 17. The Tax reform bill also increased the income limits for the credit. This means more families will be able to avail child tax credit from 2018 onwards.
Changes in Child Tax Credit Thresholds
Filing Status
2017 Child Tax Credit Threshold
2018 Child Tax Credit Threshold
Single
$75,000
$200,000
Married Filing Jointly
$110,000
$400,000
The qualifying child must also have a valid Social Security Number issued before the due date of the tax return, including extensions. ITINs will be eligible for $500

6. Tax Credits for older children and other relatives:
The new law also created a second smaller credit of up to $500 per dependent aimed at taxpayers supporting older children and other relatives who do not qualify for the Child Tax Credit.

7. 529 College Savings Plan spending criteria:
Funds invested for your kid’s college education in 529 College Savings Plan are invested and grow tax-free. The new tax law made it possible for you to use if your child is in a private school or if you pay for tutoring for your child in kindergarten through twelfth grade. The money that you use to pay these expenses from 529 is tax free. The fund can be used for college education anywhere in the world

8. Elimination of Moving Expenses:
Moving expenses deduction is exclusively for military personnel and their family members.

9. Discharge of Student Loan Debt:
Under the new tax law, the student loan debt is discharged up on the death or disability and will not be taxed as income.

10. Charitable contributions:
The bill would increase the income-based percentage limit for charitable contributions of cash to public charities to 60%

11. Changes to Itemized Deduction:
State and Local Tax (SALT)
SALT is composed of higher of State and local tax or sales, Real estate taxes and Personal Property Taxes. The new law limits the deduction to $10,000
Medical Expenses:
The new out-of-pocket medical expenses that exceeds 7.5% of your adjusted gross income can be claimed in itemized deduction home owners can deduction.
Mortgage:
New home owners can deduction mortgage interest paid on up to $750,000 of the principal value of the new home. Old mortgage holders are grandfathered in.
Restriction on Home Equity Loan interest
The new tax law allows deduction of home equity loan interest only if it is used for home improvement

12. Work Related Expenses:
Work related expenses and/or unreimbursed employee expenses cannot be deducted as itemized
deduction
Tax preparation Fees:
Tax preparation fees is no longer deductible under itemized deduction.
Restriction on personal casualty or theft
Under the new tax law, you can deduct personal casualty or theft loss only during a federally declared disaster.

13. Unchanged DEductions:
The following deductions has been left untouched:
Teacher unreimbursed classroom supplies expenses of $250
Adoption tax credit of up to $13,570
Student Loan interest up to $2,500
Electric cars tax credit of up to $7,500 based on the battery capacity

14. C corporation taxes:
The Tax Cuts and Jobs Act (TCJA) reduced the U.S. federal corporate income tax rate from 35 percent to 21 percent

15. Enhancing Pass-Through business income:
Business owners can deduct up to 20% of the qualified business expenses from a partnership, s corporation or sole proprietors

16. Cash method of accounting:
The bill would expand the list of taxpayers that are eligible to use the cash method of accounting by allowing taxpayers that have average annual gross receipts of $25 million or less in the three prior tax years to use the cash method.

17. Net operating losses:
The bill would limit the deduction for net operating losses (NOLs) to 80% of taxable income (determined without regard to the deduction) for losses

18. Sec. 179 expensing:
The bill would increase the maximum amount a taxpayer may expense under Sec. 179 to $1 million and increase the phaseout threshold to $2.5 million.

19. Luxury automobile depreciation limits:
The bill would increase the depreciation limits under Sec. 280F that apply to listed property. For passenger automobiles placed in service after 2017 and for which bonus depreciation is not claimed, the maximum amount of allowable depreciation is $10,000 for the year in which the vehicle is placed in service, $16,000 for the second year, $9,600 for the third year, and $5,760 for the fourth and later years

20. Changes for 2019:
Affordable Care Act - Obamacare:
The new tax reform bill removes the individual mandate penalty for not carrying a health insurance from The penalty exists for 2018.
Alimony:
Alimony will no longer be deductible for the payor and the receiver will not have to report it as income in 2019

21. IDENTITY PROTECTION PIN
Retrieve Your IP PIN

22. You received an IRS letter inviting you to 'opt-in' to get an IP PIN, or
You filed your federal tax return last year with an address in Florida, Georgia, District of Columbia, Michigan, California, Maryland, Nevada, Delaware, Illinois, or Rhode Island.

23. IRS letter inviting you to 'opt-in' to get an IP PINOr
If you filed your prior year tax return from one of the below states:
Florida,
Georgia,
District of Columbia,
Michigan,
California,
Maryland,
Nevada,
Delaware,
Illinois,
Rhode Island.