Tax Cuts and Jobs Act (TCJA). There are many changes for 2018 due to the TCJA bill that was passed in December of 2017. Some are good and some are bad. To help you get organized and not miss any new credits or deductions, we are highlighting some of the key changes to help you get a bigger refund. If you should have any questions or need further explanation, please do not hesitate to call us at 309-827-4010.
Tax Rates. For 2018, most tax rates have been reduced. This means most people will pay less tax starting this year. The 2018 tax rates are 10%, 12%, 22%, 24%, 32%, 35%, and 37%.
Standard Deduction. The standard deduction is a dollar amount that reduces the amount of income on which you are taxed and varies according to your filing status. The standard deduction reduces the income subject to tax. The TCJA nearly doubled standard deductions. When you take the standard deduction, you can’t itemize deductions for mortgage interest, state taxes and charitable deductions on Schedule A, Itemized Deductions.
Starting in 2018, the standard deduction for each filing status is:
Single (S)……………………………………………………………………… $12,000 (up from $ 6,350 in 2017)
Married filing jointly (MFJ) or Qualifying widow(er) (QW)……. $24,000 (up from $12,700 in 2017)
Married filing separately (MFS)………………………………………… $12,000 (up from $ 6,350 in 2017) Head of household (HOH)………………………………………………. $18,000 (up from $ 9,350 in 2017)
The amounts are higher if you or your spouse are blind or over age 65 (event). You will receive an additional $1,600 for each person and each “event” if your filing status is MFJ or QW. You will receive an additional $1,300 for each “event” if your filing status is Single, MFS or HOH. Most taxpayers have the choice of either taking a standard deduction or itemizing. If you qualify for the standard deduction and your standard
