IRS corner: 2018 reminders

On Dec. 22, 2017, Congress passed the Tax Cuts and Jobs Act (TCJA), the first major overhaul to the tax code in more than 30 years.tax time

That law goes into effect for tax year 2018, due in 2019. The changes probably won’t affect the 2017 taxes that you will file this year.

Filing this year

There have been minor changes for this tax year (2017), however, including:

  • The tax filing season began Jan. 29. You may file anytime.
  • Tax returns are due Tuesday, April 17. April 15 is a Sunday.
  • 2017 mileage rates
    Rates for the use of a car (van, pickup, panel truck, too) for calendar year 2017 are:

    • 53.5 cents per business mile, down from 54 cents
    • 17 cents per medical or moving mile, also down from 19 cents
    • 14 cents per charitable organization mile, unchanged
  • 2017 deductions
    • The standard deduction for head of household rose $50 to $9,350
    • Standard deduction, married filing jointly, up $100 to $12,700
    • The Maximum Earned Income Credit, from $6,269 to $6,318
    • The personal exemption is unchanged at $4,050.

Planning for tax year 2018

First of all, mileage rates for filing next year are:

  • 54.5 cents per business mile, up 1 cent from 2017
  • 18 cents per medical or moving mile, also up one cent from 2017
  • 14 cents per charitable organization mile, unchanged

There are dramatic changes with the new tax package.

At the household level for tax year 2018, the new law:

  • Nearly doubles the standard deduction (for single filers, from $6,350 to $12,000; for married couples filing jointly, from $12,700 to $24,000)
  • Eliminates the $4,050 personal exemption
  • Doubles the Child Tax Credit from $1,000 to $2,000 per child
  • Temporarily reduces most individuals’ tax rates
  • Limits how much state and local property, income and sales taxes can be legally deducted to $10,000

For businesses, the law:

  • Slashes the corporate tax rate from 35 to 21 percent
  • Nearly doubles the amount small businesses can claim for buying property, such as a vehicle or machinery, from $510,000 to $1,000,000
  • Eliminates the corporate alternative minimum tax

And quite a bit more. For more on these changes, see irs.gov/newsroom/resources-for-tax-law-changes.


Categorized as:

Tags

If you liked this post you might also like: