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    Tax Law Changes for 2018 Tax Returns

  • Federal income tax filing deadline

    For tax year 2018, the IRS's deadline to file your taxes is April 15th, 2019.

    If you file your tax return early and owe the IRS money, you will still have to send your payment in to the IRS by this date to avoid any penalties.

  • Delayed refunds for returns claiming certain credits

    The Protecting Americans from Tax Hikes Act of 2015 (the PATH Act), was enacted on December 18, 2015. The PATH Act contains several changes to the tax law that affect individuals, families, businesses and help safeguard against tax fraud.

    The PATH Act mandates that the IRS not issue a refund on tax returns claiming the Earned Income Tax Credit or Additional Child Tax Credit until Feb. 15. The additional time helps the IRS stop fraudulent refunds from being issued to identity thieves and fraudulent claims with fabricated wages and withholdings.

    This applies to the entire refund, not just the portion associated with these credits.

  • IRS Electronic Filing PIN

    Electronic Filing PIN, an IRS-generated PIN used to verify your signature on your self-prepared, electronic tax return, is no longer available. To validate your signature, you must use your prior-year adjusted gross income or prior-year self-select PIN.

  • Standard deductions

    For 2018, the new law sets the standard deduction at:

    • $24,000 for married individuals filing joint returns and surviving spouses
    • $18,000 for heads of households, and
    • $12,000 for single taxpayers as well as married individuals filing separately.
  • Personal and dependency exemptions eliminated

    The Tax Cuts and Jobs Act repeals the exemption deductions by reducing the exemption amount to zero for tax year 2018.

  • Earned Income Credit

    The earned income credit applies to working taxpayers that have earned income below certain thresholds. The qualification threshold depends on the number of persons in each family. The thresholds in 2018 to qualify for this credit include:

    • No Children:  earnings must be less than $15,270 or $20,950 if married filing jointly.
    • One Child:  earnings must be less than $40,320 or $46,010 if married filing jointly.
    • Two Children:  earnings must be less than $45,802 or $51,492 if married filing jointly.
    • Three or More Children:  earnings must be less than $49,194 or $54,884 if married filing jointly.

    The tax credits themselves have also increased in 2018, with the maximum credits that can be received as indicated below:

    • No Children:  $519
    • One Child:  $3,461
    • Two Children:  $5,716
    • Three or More Children:  $6,431
  • American Opportunity Credit

    In order to claim the American Opportunity Credit, you must now provide the employer identification number (EIN) of the institution to which your qualified expenses were paid.

  • Alternative Minimum Tax

    The Alternative Minimum Tax (AMT) exemption amount rises in 2018 to $95,750 ($191,500, for married couples filing jointly).

  • Mileage deduction rates
    Category Rate (January to December 2018)
    Business Miles 54.5 cents per mile
    Charitable Services 14.0 cents per mile
    Medical Travel 18 cents per mile
  • Healthcare: Individual Shared Responsibility Provision

    In 2018, each individual taxpayer must carry the required "minimum essential coverage" each month, qualify for an exemption, or pay mandatory taxes. For those facing this new penalty, relief provisions have been written into the tax laws to help taxpayers transition into these new requirements. The minimum amount of insurance coverage you must carry is calculated per family member and then added together.

  • Increased child tax credits

    Changes to child tax credit may be the most important provisions of the Tax Cuts and Jobs Act for taxpayers with children or other dependents. As in previous law, taxpayers may claim a child tax credit for each eligible child under 17 years of age.

    The new law, however, doubles the credit from $1,000 per child to $2,000 per child. Under the new law, the credit reduction does not start until income exceeds $400,000 on a joint return or $200,000 on all other return. Up to $1,400 of credit per child is reimbursable for low - income taxpayers in 2018.

    Starting in 2018, taxpayers who claim child credit must provide the child's social security (SSN) number on the return. In the past, a taxpayer could provide a child without an SSN with another tax identification number.

    New credit for other dependents. The new legislation creates a new non - refundable tax credit of $500 for dependents who are not eligible for the regular child tax credit, including children under 17 who do not have an SSN.

  • Itemized deduction changes

    The Tax Cuts and Jobs Act introduces a number of changes to the rules for taxpayers who itemize. The new law temporarily resets the deduction limit for medical expenses from 10 percent to 7.5 percent of adjusted gross income for 2018, eliminates deductions for personal losses and theft losses other than disaster losses, increases the deduction limit for certain charitable contributions, dismisses various itemized deductions and eliminates the overall limit for itemized deductions.

    State and local tax deductions. For 2018, the new tax law places a $10,000 limit on itemized deductions for state and local income and property taxes. The limit is $5,000 for married filing separately.

    The Act limits mortgage interest deduction to the interest on $750,000 ($375,000 for married filing separately) of acquisition debt and completely eliminates deductions for the interest on home equity debt.

  • Deduction for qualified business income