Numerous changes for tax year 2018
HUNTINGTON — With the Tax Cuts and Jobs Act of 2017, there are numerous tax provisions that have been eliminated or modified for tax year 2018.
“For personal income tax filers, the new tax law nearly doubles the standard deduction amount,” said Tomi J. Weber, a certified public accountant (CPA) at Hess, Stewart and Campbell in Huntington.
Single taxpayers will see their standard deductions jump from $6,350 for 2017 taxes to $12,000 for 2018 taxes, which are the ones you file in 2019. Married couples filing jointly will see an increase from $12,700 to $24,000.
“These increases could mean that fewer people will have to itemize,” Weber said.
Last year, roughly 30 percent of taxpayers itemized. According to the Internal Revenue Service website, the law eliminates the personal and dependent exemptions, which were $4,050 for 2017 and increased to $4,150 in 2018. It also limits the amount of state and local property, income and sales taxes that can be deducted to $10,000. In the past, these taxes have generally been fully tax-deductible.
The new tax law also eliminates the tax penalty for not having health insurance after Dec. 31, 2018. It temporarily lowers the floor above which out-of-pocket medical expenses can be deducted, according to the IRS.
“There are lots of changes for the personal income tax filers as well as small-business and corporate tax filers,” Weber said.
The new tax law has myriad changes for business.
“The biggest includes a reduction in the top corporate rate to 21 percent,” Weber said.
Weber said the new law gave birth to a brand-new provision: Section 199A, which permits “pass-through” entities, such as owners of sole proprietorships, S corporations or partnerships, to deduct up to 20 percent of the income earned by the business.
“This allows people who are small-business owners to keep pace with the significant corporate tax cut offered by the Act,” she said.
There are also many more changes, including new income tax brackets, increased child tax credit, state and local tax deductions and mortgage interest deductions.
“I always recommend making an appointment with us here at Hess, Stewart and Campbell by calling 304-523-6464,” Weber said. “With all of these changes, you don’t want to miss out on credits and deductions offered by the new tax law.”
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