On December 22, 2017, the President signed into law H.R. 1, “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018,” also known as the Tax Cuts and Jobs Act (TCJA). This is the biggest tax reform law in over 30 years. The text of the TCJA can be accessed HERE.
These tax law changes are not simple so it is very important to schedule an appointment to go over the tax law changes that apply to your situation and learn how we can help you become a SMART Client, save money and reduce taxes.
With a few exceptions, the provisions of the TCJA are effective for tax years beginning January 1, 2018. All of the TCJA’s provisions dealing with individuals (other than certain inflation adjustments and the repeal of the Affordable Care Act’s individual mandate) will expire after 2025. The TCJA’s business provisions do not have a sunset date.
When you file your 2018 tax returns — about a year from now — your tax return will look very different. Most changes don’t happen until next year so it is very important that we meet to discuss the changes and plan for next year now.
Learn about tax savings available to you by contacting us at (949) 877-3143 or scheduling a consultation.
NEW Business Tax Benefits
- Corporate tax rate is now a flat 21%
- Alternative Minimum Tax (AMT) for corporations is repealed
- 20% deduction for qualified business income of “passthrough” entities
- Section 179 depreciation limitation increased to $1 million
- 100% bonus depreciation extended until December 31, 2022
- Employer-provided family leave credit available for 2018 and 2019 only
NEW Individual Tax Benefits
- Individual maximum tax rate is reduced from 39.6% to 37%
- Standard deduction increased to $24,000 (MFJ), $18,000 (HOH) & $12,000 (Single or MFS)
- Medical expense AGI threshold will temporarily drop to 7.5% of AGI for 2017 and 2018
- AMT threshold is increased to $109,400 (MFJ) and $70,300 (Single) so fewer middle-income taxpayers will be subject to AMT
- Estate tax exclusion has nearly doubled to $10 million (adjusted for inflation)
- Annual gift tax exclusion remains the same ($14,000 for 2017 and $15,000 for 2018), but the maximum rate on gifts is 35%
- Child tax credit is increased for each child to $2,000 of which up to $1,400 of which is refundable for each child) and each non-child dependent can now receive a new dependent credit of $500
- 529 Account Distributions for K-12 education increased to $10,000