Stuff that is New for Tax Year 2018
1) Well - just about everything. This is the first complete year of the Trump Tax Plan. It should benefit most taxpayers (but admittedly not all). When I prepared returns last year if I thought you would be seriously affected we discussed what you would need to do to prepare for 2018. But as they say in car commercials, "your mileage may vary". So after I prepare your 2018 return if the end result is not what you wanted we will be able to make changes to make sure 2019 will come out as expected.
2) The IRS is scheduled to start processing 2018 tax returns on January 29, 2019. If you get your paperwork early, please do send it to me ASAP and I will schedule appointments starting with that date. It is also possible to come in earlier, sign off, and I will transmit your return and it will be at the "front of the line", so to speak. Be SURE you have ALL of your tax forms if you file early. Otherwise you will be spending more time and $$$ filing an amended tax return to correct the omission(s).
3) Delayed Refunds - Same as in 2017. Congress passed a new law that requires the IRS to delay tax refunds which include the Additional Child Tax Credit (ACTC) and the Earned Income Tax Credit (EITC). If your return claims these credits the IRS will hold your refund until February 15, 2019. Supposedly the delay is to give the IRS additional time to spot fraudulent returns.
Tax Code Changes Specific to 2018
(limited to items that I feel will affect most taxpayers)
4) The standard deduction (almost) doubles for all filing statuses.
5) Personal exemptions are eliminated and a new "Family Credit" of $500 per dependent replaces it.
6) Moving Expenses (Form 3903) will only be allowed for active duty military personnel.
7) The Child Tax Credit (CTC) for children under 17 is doubled from $1K to $2K and the income range where the credit is allowed is greatly increased.
8) Overall tax rates are reduced 3% to 4% for all taxpayers.
9) For taxpayers who buy a house in 2018 (or later) the deduction for mortgage interest is limited to $750K of mortgage debt.
10) For taxpayers who itemize, the deduction for state and local taxes is limited to $10K. While many taxpayers were very concerned about this provision last year, I think its impact will be minimal. WHY? - because most higher-income taxpayers ALREADY had this deduction limited as part of the AMT (Alternative Minimum Tax). You just didn't realize it. And the AMT has been significantly changed, the income levels required to be subject to the AMT (almost) doubled this year.
11) The following items which were deductible on schedule "A" if they exceeded 2% of adjusted gross income are no longer a deduction - investment expenses, tax prep fees, unreimbursed employee expenses, and repayment of SSA benefits.
12) Taxpayers who have income from self-employment pass-through entities (sole proprietorships, partnerships, and S-corporations) are entitled to an additional deduction of 20% of their total business income. This effects income tax only, not self-employment tax.
13) The business deduction for entertainment is eliminated. Deductions for business meals (where you meet with associated and clients to discuss matters related to your business) are still allowed at the 50% rate.