New tax reforms explained

The new U.S. 2018 tax law will affected every taxpayer in the country.  Most of our clients will see at least a small increase in the amount of their refund or at least a  small decrease in the amount of their balance due. Many of our clients will be impacted most by just a few of the numerous provisions of the new law.  Some of those provisions include:

Income Tax Rates: Generally, income tax rates have been lowered for anyone with taxable income below $150,000.  In some cases, lower rates apply to incomes even greater than $150,000.

Standard Deduction: The Standard Deduction has been almost doubled for each filing status.  (Single – $6,300 to $12,000; Married Filing Jointly – $12,600 to $24,000; Head of Household – $9,300 to $18,000).

Personal Exemption: The Personal Exemption of $4,050 has been repealed (eliminated) for all taxpayers

Dependent Exemption: The Dependency Exemption of $4,050 for each dependent has also been repealed (eliminated) for all dependents.

Child Tax Credit / Additional Child Tax CreditThe Child Tax Credit and the Additional Child Tax Credit from the old law have been merged into a single credit in the new law with a restriction on the amount of the new credit that is refundable. The Child Tax Credit has been doubled from $1,000 to $2,000 but only $1,400 is refundable and the amount of income required to receive the refundable portion of the credit has been increased. To receive the full benefit of the increase in the credit, your return must initially compute an income tax liability that can be reduced by the credit.

Joplin Tax Service will help!