Dependent-related Tax Updates:

• Earned Income Tax Credit (EITC)
​For 2018, the maximum EITC amount available is $519 with no children, $3,461 with one child; $5,716 with two children; $6,431 with three or more children.
​Phaseouts begin at $15,270 for single taxpayers with no children and end at $54,884 for married filing jointly taxpayers with three or more children.

​• Child Tax Credit
​For 2018, this credit is increased to $2,000 per qualifying child under 17. A $500 credit is now available for all other dependents.

​​• Additional Child Tax Credit
For 2018, this refundable portion of the Child Tax Credit is up to $1,400 per qualifying child under the age of 17.

​• Kiddie Tax
For 2018
, the threshold for the kiddie tax – meaning the amount of unearned income before taxation at the estate/trusts rate – is $2,100.
Unearned income between $1,050-$2,100 is taxed at the child's tax rate of 10%. Unearned income below $1,050 is not subject to tax.​

​• Adoption Credit
​For 2018, the credit allowed for an adoption of a child with special needs is $13,810. The maximum credit allowed for other adoptions is the amount of qualified adoption expenses up to $13,810. 

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Current Tax News
​​​​​​General Tax Updates/News:​​

Moving Expenses
Moving expenses are now only deductible for military. Any employer payments or reimbursements will be taxable.

​• Net Investment Income Tax
Taxpayers may be subject to the net investment income tax (NIIT) — a 3.8% tax on the lesser of net investment income or the excess of MAGI over $250,000 ($200,000 if single or head of household, $125,000 if married filing separately). The NIIT does not apply to nonresident aliens.

​• Alternative Minimum Tax (AMT) Exemption Amounts
The AMT exemption has increased to $70,300 for individuals, and $109,400 for married couples.

​• American Opportunity Tax Credit
​The American Opportunity Tax Credit provides a maximum credit of $2,500 per eligible student.
The credit applies ONLY to four years of a student’s undergraduate education, and up to $1,000 of said credit is refundable.

​• Advantages for Small Businesses
Certain qualifying property purchased and placed into service after 9/27/17 and before 1/1/2023, may use the new 100% bonus depreciation rate. ​

​​

Rates for Tax Year 2018

Personal Exemption:

There is NO personal exemption for 2018.

Standard Deduction Rates:

$24,000 for married taxpayers filing jointly
$18,000 for head of household
$12,000 for single taxpayers
$12,000 for married taxpayers filing separate.
The additional standard deduction amount for the aged (65 or older) or the blind is $1,300; that amount is increased to $1,600 if the taxpayer is single or head of household, and not a surviving spouse.

​​
Standard Mileage Rates:
Business:                 54.5 cents
Medical/Moving:          18 cents
Charitable:                   14 cents


2018 Income Tax Brackets
There are 7 tax brackets for federal income tax:
​10%, 12%, 22%, 24%, 32%, 35%, and 37% 
​The amount of tax you owe is based on your filing status and income level.

​​The Tax Cuts and Jobs Act (HR 1, “TCJA”), enacted by Congress in December 2017, eliminates the individual health insurance mandate under the Affordable Care Act (popularly called Obamacare). 

​      However, this provision doesn't take effect 
​                                  until 2019.

​​If you did NOT get medical coverage in 2018 you will have to pay the higher of these two amounts when you file your 2018 tax return:


​​​​​​•2.5% of your yearly household income. The maximum penalty is the national average premium for a bronze plan.

•$695 per adult for the year ($347.50 per child under 18). The maximum monthly penalty per family using this method is $2,085.
​​Social Security Tax Updates:

​• Social Security AND Medicare combined withholding rate is: 7.65% for Employees
15.3% for Self-Employed​

The maximum taxable earnings for Social Security wage limit of $128,400. There is no earnings limit for Medicare.

​​​​​Changes to Itemized Deductions:​​

​• Limitation on Itemized Deductions.
Limitation for itemized deductions is suspended for years 2018-2025.

​• Medical and Dental Expenses.
Taxpayers can deduct only the part of their medical and dental expenses that exceeds 7.5% of the amount on line 7. This deduction does not apply to nonresident aliens.

​• Home Mortgage Interest
​For acquisition indebtedness incurred as of 12/15/17 or later, the home mortgage interest deduction is limited to the first $750,000 of home loans combined.
For mortgages before 12/15/17, interest is limited to the first $1,000,000 of home loans combined​​
For tax years following 2018, interest on home equity indebtedness is only deductible if used to buy, build, or improve the mortgaged home.
​​​
​• Casualty and Theft Losses
As of 2018, the only casualty and theft losses allowed are those incurred due to a federally declared disaster.

Miscellaneous Deductions
The 2% miscellaneous deductions are no longer allowed. These include unreimbursed employee expenses (travel, job education, union dues, etc.), tax preparation fees, and other expenses (investment, safe deposit box, etc.) 

• Charitable Deductions
The limit for charitable deductions has increased to 60% of the taxpayer's AGI.​

​​• State and Local Taxes
The combined amount is now limited to $10,000.

​​​​​​​**Beginning 2018, individuals with "seriously delinquent tax debt" (greater than $59,000, liens, and/or evasion) may have their passports revoked, or applications denied.**