Tax Changes’ Effect on Your 1040
As we approach the end of 2018, it is time to review your tax situation. It can be substantially different than it was in 2017 thanks to the Tax Cut and Job Act of 2017 (TCJA). The aspects of this law will have an impact on most taxpayers.
First, let’s take a look at some of the most basic provisions of the law:
The maximum tax rate decreases from 39.6 percent in 2017 percent to 37 percent in 2018.
The standard deduction increases from $6,350 in 2017 to $12,000 in 2018 for single taxpayers and from $12,700 in 2017 to $24,000 in 2018 for married filing jointly.
The personal and dependency exemptions have been eliminated in 2018.
The child credit for a child under 17 has increased from $1,000 in 2017 to $2,000 in 2018. In addition, in 2018, the amount of the credit does not start to phase out until adjusted gross income reaches $400,000 for married filing jointly taxpayers and $200,000 for all others. In 2017, the credit began to phase out at $110,000 for married filing jointly taxpayers, $55,000 for married filing separately taxpayers, and $75,000 for all other taxpayers. This will result in many more taxpayers being eligible for this credit.
Itemized deduction changes
The total amount of