2018 Tax Highlights – The Tax Cuts and Jobs Act was signed back in December 2017, creating small reductions to income tax rates for most individual tax brackets, not to mention corporations. This new tax bill was known as one of the most exhaustive tax legislation since the Tax Reform Act back in the late 80s.
The newly designed Form 1040 is now the size of a postcard; there’s no longer an A version or an EZ version. You’ll still have filing prompts including wages, salary, tax interest, capital gains as well as extra new schedule 1 through 6.
The Tax Cuts and Jobs Act also deliver lower tax rates, with the highest one being 37% instead of last year’s 39.6%.
The tax rates are still in seven brackets, and seem to be benefitting most people, but there are exceptions.
When it comes to investment income, the tax rates for long-term capital gains such as income made from the sale of shares of a high-tech stock and qualified dividends haven’t changed. They’re typically lower, although the Miami accountants point out the break points for the 0% rate, the 15% rate and 20% rate have.
The 2018 tax highlights still have you choose between the standard deduction or itemizing.
Itemizing means deducting mortgage insurance premiums, charitable donations up to 60%, medical and dental expenses over 7.5%, gambling losses, student loan interest and more, in order to reduce your overall income tax.
The Miami accountants want you to know that in 2018, some itemized deductions will no longer be allowed. This includes alimony payments, moving expenses (except for military families), natural disaster losses, job –hunting expenses and more. The standard deduction for 2018 is almost twice what it was last year, $24,000 for those who file jointly, $18,000 for heads of households and $12,000 for individuals. The increase in standard deductions probably means most people won’t bother with itemizing because it makes for simpler accounting.
For corporations, the 2018 tax highlights mean that C corporations a 21% corporate rate.
It used to be 15% on taxable income of $0 to $50,000, 25% on $50,000 to $75,000, 34% on taxable income of $75,001 to $10 million; and 35% on taxable income over $10 million.
When it comes to filing your taxes, there are more changes for 2018 due to the Tax Cuts and Jobs Act. Depending on your employment status and marital status, you’ll have to know how these affect your tax rates and filing. To get the most out of your tax filing, make sure you work with a professional accounting firm like the Miami accountants.
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