2018 Federal Income Tax Highlights

[Miss Marty]

Form 1040 has been redesigned for 2018
Form 1040A and 1040EZ will no longer be used.

Tax reform was passed by Congress - some of the changes include:

• Change in tax rates. Most rates have been reduced.

• Rhe standard deduction amount has been increased for all filers.

The amounts for 2018 are:
• Single or Married filing separately $12,000.
• Married filing jointly or Qualifying widow(er) $24,000.
• Head of household $18,000.

• Personal exemption suspended.

You can’t claim a personal exemption deduction for yourself, your spouse, or your dependents.

• Increased child tax credit. The child tax credit amount has been increased.

• New credit for other dependents. A new credit of up to $500 may be available for each dependent who doesn’t qualify for the child tax credit.

• Changes to itemized deductions. These changes include limiting the deduction for state and local taxes and eliminating both the deduction for miscellaneous expenses and the overall limit on itemized deductions.

For details on these and other changes, preview

What’s New

https://www.irs.gov/pub/irs-dft/i1040gi--dft.pdf

This is an early release draft (119 page pdf)
IRS tax forms, instructions, and publications

Note: Do not file draft forms

*Due date of Federal Return
File Form 1040 by April 15, 2019.

 

[plpgma]

Yes -- Filing for 2018 taxes will be a learning experience for all!

 

[bluehende]

I have been surprised by how many people I know do not realize that the personal exemption is gone. I think there are going to be some surprises for a lot of people. Hopefully the withholdings have been good so it won't be a problem.

 

[bogey21]

Quite frankly I am ignoring the whole thing (maybe to my detriment, who knows?). My plan is to log on to Turbo Tax next time I file as I have done for the last 20 years or so and let Turbo Tax figure it all out for me. If after reviewing my Return and comparing it to prior years Returns, I see something I need to change, I will look at making the change going forward. Simplistic? Yes, but stress free...

George

 

[PigsDad]

Yes -- Filing for 2018 taxes will be a learning experience for all!

For me, it will make my return much simpler since I will not have to itemize deductions. But that will only be for ever other year, as we are planning on bunching our charitable contributions to every other year, so that it will pay for us to itemize in those years. We will also push property tax payments in those same years, but it is unclear if that will help due to the SALT limitations.

Kurt

 

[JohnPaul]

I’m a bit worried. I live in California and think my taxes will be going up. No real way to know until doing our taxes.

 

[Tia]

I'm waiting to see the increase in my take home pay................ so far haven't noticed it

 

[taterhed]

Smoke and mirrors. You can google the 'who gains' 'who loses' and see the general effect of the new law...

Here is an EXCELLENT chart that shows "old" "new" "effects" on a side by side chart. Very easy to read: https://www.fbco.com/wp-content/uploads/2018/06/tax-reform-individual-changes-chart.pdf

Here's the bottom line for those without excessive SALT deductions that can't be avoided:

 

[bluehende]

View attachment 9236[/QUOTE

Smoke and mirrors. You can google the 'who gains' 'who loses' and see the general effect of the new law...

Here is an EXCELLENT chart that shows "old" "new" "effects" on a side by side chart. Very easy to read: https://www.fbco.com/wp-content/uploads/2018/06/tax-reform-individual-changes-chart.pdf

Here's the bottom line for those without excessive SALT deductions that can't be avoided:

View attachment 9236

The chart does not take into account individual scenarios. My itemized deductions were 23000 last year. With the gain in standard and loss of personal exemption my taxable income has gone up 7000. I am in the lowest bracket so my rate does not change. So unless there is some advantage I am not aware of my taxes have gone up 700.

 

[bogey21]

I like being in the dark until Turbo Tax shows me what happened when I file. Less stress..

George

 

[bluehende]

I like being in the dark until Turbo Tax shows me what happened when I file. Less stress..

George

I worry a bit about penalties as I do not like to have the government hold my money interest free. That is easily taken care of as long as you have as much with held this year as you owed last year. I also like to manage a bit more. I see a potential tax problem (good to have) when I have to start taking out of my retirement accounts and the long term capital gains I am sitting on.

 

[rapmarks]

I don’t like being in the dark. One year my mutual funds paid out huge amounts in December and a stock got called on dec 31. I owed forty thousand additional income tax that year. Not only did I have to pay that in April but I had to send in the same amount for the following year. I like knowing what to expect. It was real nice to get the capital gains, but they didn’t last long when the tax bill came.

 

[bogey21]

I don't know how the penalties are calculated for being under withheld. All I do know is that my income moves around a lot from year to year and that I owe the IRS money every year when I file. I have only been assessed a penalty one time in over 20 years, and it was small...

George

 

[Miss Marty]

Change in Maryland State Tax on Military Retiree Income

(Hometown Heroes and Veterans Act of 2018) Individuals Age 55
Maryland Income Tax Subtraction Modification Retirement Income

http://mgaleg.maryland.gov/2018RS/chapters_noln/Ch_573_sb0996E.pdf

 

[bbodb1]

When I first read this thread title, I was thinking here was another candidate in the long list of oxymorons......

 

[Miss Marty]

The IRS announced Monday, that despite the
government shutdown, it will process tax returns
starting Jan. 28 and issue tax refunds as planned,
a move ordered by the White House earlier today.

 

[Talent312]

Mine is relatively simple (except for determining taxable SS).
But I was able to design a spreadsheet and run the numbers.
It seems I'll owe some, so I won't be in any hurry to get it done.
.

 

[Miss Marty]

Get Transcript
@ IRS.GOV

You can get various Form 1040-series transcript types online or by mail. If you need your prior year Adjusted Gross Income (AGI) to e-file, choose the tax return transcript type when making your request.

There is a new transcript format that better protects your data. This new format partially masks your personally identifiable information. Financial data will remain fully visible to allow for tax preparation, tax representation or income verification.

About the New Tax Transcript and the Customer File Number.

 

[VacationForever]

I posted on another thread that I have a spreadsheet that maps out our income and expenses for the next 20 years. On my spreadsheet we will owe $5,892 in 2018 taxes, and we should not have a penalty because we paid 0 taxes last year. Let's see if my number comes within $100 of my estimate when we put them into Turbo Tax. We are still awaiting the official tax statements from the brokerage firm, and we are ready to put in the numbers. From my calculation, despite having high medical costs, taking standard deduction is advantageous to itemized deduction.

 

[Shankilicious]

File and got my federal return with a week. The standard deduction of 24000 came within 800 of what we would have gotten itemized. This was the plan I'm sure, to have a lot more people just go with the standard so filing will go quicker.

 

[SmithOp]

Filed Jan 31st and got my direct deposit yesterday. Standard deduction, got a little extra for being 65 or over.


Sent from my iPad using Tapatalk Pro

 

[Sea Six]

Our taxes are down about 14%. The standard deduction takes away all the things we used to itemize. I'm actually concerned about the charitable contributions since they don't help reduce our taxes anymore.

 

[amycurl]

Trust me, everyone in the nonprofit sector is worried about that as well....

 

[taterhed]

Hmmm.

My comment about taxes and charity is hereby self-redacted.

 

[Miss Marty]

~ The Tax Cuts and Jobs Act ~

How Will the Recent IRS Tax Law
Changes Affect You ? (Highlights)

The standard deduction has doubled.

The rates for the seven income tax brackets
for individual taxpayers have changed.

Taxpayers can now get up to $2,000 per child under age 17,
and under the new tax law more taxpayers can claim it.

Taxpayers won’t be penalized for not buying
health insurance in 2019 but what about 2018?

The new tax law caps - State and Local Tax
deductions, also known as SALT, at $10,000.

Source: Key Tax Law Changes Online @

https://www.taxslayer.com/tax-reform