With major changes to the United States Tax Code, as well as changes implemented by the IRS, your 2018 taxes will be a much different story from your 2017 taxes. Here at Robin S. Weingast & Associates, we’re reading up on what you need to know to be prepared. We’ll continue to share information as we learn about the implications of the new law and IRS changes, but here are ten key takeaways you should keep in mind:
1) Standard deductions will change.
If you’re married and filing jointly your standard deduction will increase to $24,000. If your single or are married and file separately, your standard deduction increases to $12,000. For heads of households, the deduction will be $18,000, up from $9,550.
2) The personal exemption will be eliminated.
3) Your tax bracket will change
In addition to adding a new tax bracket for those who earn above $500,000, there are now revised tax brackets. You can find yours here.
4) Changes to the estate tax
The estate exemption doubles to $11.2 million per individual and $22.4 million per couple in 2018.
5) Changes to the child tax credit
The child tax credit has been raised to $2,000 per qualifying child, those who are under 17, up from $1,000.
6) Mortgage interest caps
For mortgage balanced taken out after December 15 of 2017, the deduction for interest is capped at $750,000. For those prior, the limit is still $1 million.
7) Changes to state and local taxes
The itemized deduction is limited to $10,000 for both income and property taxes paid during the year.
8) Retirement plan contribution limits increased
You can now contribute $18,500 per year, rather than $18,000 to your 401(k), 403(b) and most 457 plans, and the Thrift Savings Plan.
9) Changes to IRA contributions
Savers who contribute to individual retirement accounts will have higher income ranges following cost-of-living adjustmen