With tax year 2017 in the rearview mirror, it’s time to look ahead and begin to plan for 2018. Congress’ massive tax overhaul has implications for everyone who pays taxes in the US. These changes could affect choices you make during 2018, such as the amount you pay in estimated taxes, how you use investment income, your paycheck withholding, or your charitable giving. Read on to learn about some of the changes to federal tax law that could affect you for tax year 2018, and contact a seasoned Dallas and Tyler tax lawyer with any additional questions.
Most Texans will see a change to their federal tax liability: While the highest earners will see the greatest reduction in their income tax liability, even those in the lowest tax bracket could see a change. One report found that 68% of Texans will see a reduction in their taxes, with the average Texas resident receiving a reduction in tax liability of 2.1%, or $2,520.
Increase in standard deduction: The changed tax law almost doubles the size of the standard deduction. This means that more taxpayers may be able to take the standard deduction and avoid itemizing their tax returns for 2018.
Small business owners see a change in deductions: Individuals will be permitted to deduct 20% of qualified business income earned by a partnership, S corporation, or sole proprietorship. This change is expected to affect roughly 10% of small business tax returns.
No penalty for lack of insurance: Americans without health insurance will no longer be obligated to pay a penalty on their taxes for failing to carry a health insurance policy.
Mortgage interest deduction cap: The cap for deducting mortgage debt will drop to $750,000 for home loan debt incurred beginning in 2018. Those with home equity loans will not be able to deduct new or existing interest on home equity loans as of the beginning of 2018.
Increase in child tax credit: The child tax credit for children under 17 was increased to $2,000 from $1,000.
The changes to the tax law are scheduled to phase out after 2025.
If you’re facing an audit by the IRS, owe back taxes, or are facing federal charges relating to your tax liability, get skilled professional help by contacting the offices of the Scammahorn Law Firm for a confidential consultation, in Dallas at 214-377-2875 or in Tyler at 903-595-1000.