What Robin’s Reading: 10 tax changes you need to know for 2018

With major changes to the United States Tax Code, as well as changes implemented by the IRS, your 2018 taxes will be a much different story from your 2017 taxes. Here at Robin S. Weingast & Associates, we’re reading up on what you need to know to be prepared. We’ll continue to share information as we learn about the implications of the new law and IRS changes, but here are ten key takeaways you should keep in mind:

1) Standard deductions will change.

If you’re married and filing jointly your standard deduction will increase to $24,000. If your single or are married and file separately, your standard deduction increases to $12,000. For heads of households, the deduction will be $18,000, up from $9,550.

2) The personal exemption will be eliminated.

3) Your tax bracket will change

In addition to adding a new tax bracket for those who earn above $500,000, there are now revised tax brackets. You can find yours here.

4) Changes to the estate tax

The estate exemption doubles to $11.2 million per individual and $22.4 million per couple in 2018.

5) Changes to the child tax credit

The child tax credit has been raised to $2,000 per qualifying child, those who are under 17, up from $1,000.

6) Mortgage interest caps

For mortgage balanced taken out after December 15 of 2017, the deduction for interest is capped at $750,000. For those prior, the limit is still $1 million.

7) Changes to state and local taxes

The itemized deduction is limited to $10,000 for both income and property taxes paid during the year.

8) Retirement plan contribution limits increased

You can now contribute $18,500 per year, rather than $18,000 to your 401(k), 403(b) and most 457 plans, and the Thrift Savings Plan.

9) Changes to IRA contributions

Savers who contribute to individual retirement accounts will have higher income ranges following cost-of-living adjustments. Note that the deduction phases out for individuals and their spouses who are covered by workplace retirement plans.

For single taxpayers, the limit will be $63,000 to $73,000.

For married couples, the phaseout range will vary depending on whether the IRA contributor is covered by a workplace retirement plan or not. When the spouse who is investing has access to an employer plan, the range is $101,000 to $121,000. For individuals who don’t have a retirement plan but are married to someone who does, the phaseout has been raised to $189,000 to $199,000.

The phaseout was not adjusted for married individuals who file a separate return and who are covered by a workplace retirement plan. That range is $0 to $10,000.

10) Changes to Roth IRAs

For individuals who are single or the heads of their households, the income phaseout has been raised to $120,000 to $135,000. For married couples who file jointly, the range climbs to $189,000 to $199,000.

The phaseout was not adjusted for married individuals who file a separate return. That range is $0 to $10,000.

Questions about how the new tax law will affect you? Contact the Robin S. Weingast & Associates team today and we’ll answer you questions!

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