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2018 NEW TAX LAW CHANGES

Standard Deductions (Itemize if your deductions are greater than these amounts)
2017 2018
Single $6,350 $12,000
Joint (Married) 12,700 24,000
Head of Household (must have a dependent) 9,350 18,000
Elder/blind-single 1,550 1,600
Elder/blind-married 1,250 1,300

Personal Exemptions (Dependents) $4,050 NONE

Auto Mileage Rate $ 0.535 $ 0.545

Social Security/IRA Contributions

Social Security Allowable earnings: 2017 2018


62-full retirement $16,920/$1,410 $17,040/$1,420
Full retirement age $44,800/$3,733 $45,360/$3,780
IRA Contribution (age >50) $5,500/($6,500) $5,500/($6,500)
Roth IRA Income Limits $117,000/$184,000 $120,000/$189,000

Estate & Gift Tax 2017 2018


Estate tax applies/top rate $5,450,000 (40%) $11,200,000 (40%)
Annual gift tax exclusion $14,000 $15,000

FICA Wage base has increased from $128,200 to $128,700 for 2018

ACA Penalties: 2016-2018 higher of $695 or 2.5% of income. 2019 NO MORE PENALTIES.

There are so many changes in the 2018 tax law that I’ll only cover the changes that affect most of my
clients. If you have questions about how other changes affect you, please call to make an appointment.

Children under 19 (24 if college students) will have to file a tax return if they have any unearned
income (interest, dividends, & capital gains). They are now being taxed at the higher trust & estate tax
return rates. Earned income (wages or self-employed income) is taxed at the single rate.

No more deductions for Alimony paid or income on Alimony received for divorces or settlement
agreements after December 31, 2018. If you’re getting a divorce, try to settle before then.

All miscellaneous itemized deductions are no longer deductible. This includes your investment fees,
safe deposit box, employee business expenses, union dues, tax prep fees not on a Schedule C or E, etc.

All entertainment expenses are now NON deductible! Meals are still 50% deductible.

NO MORE PERSONAL EXEMPTIONS. Tax credits have been increased to $2,000 per client <17
and $500 per dependent over 17 years old. Credits will be phased out with income >$400,000 married
and $200,000 all others. Previous phase outs were $110,000/$75,000 so more people will get to take
the child/family tax credits in 2018.

Miksch & Co, CPA, PA. Tel: (727) 367-1040 Email: mikschcpa@msn.com
No more residential energy tax credits for doors, windows, roofs, etc.

Income from a Schedule K-1, Schedule C, E & F will get a 20% tax deduction. These rules are
complicated and cannot be discussed here. Please call me to review your situation if you’re a personal
service corporation. There’s a phase out for taxable income < $315,000 married/$157,500 all others.

Mortgage interest will be limited to acquisition debt of $750,000 for mortgages taken out after
12/15/17, ($1 million if grandfathered in). Mortgage interest on equity loans will no longer be tax
deductible in 2018. Mortgages on Schedule E are still deductible. Investment interest paid on
borrowing for taxable investments are also still deductible on Schedule A.

Mortgage insurance premiums are no longer tax deductible in 2018. Check with your mortgage
company if you’ve paid your principal down to see if you can stop paying for MIP coverage. The
mortgage rules are very complex, please call if you took out a mortgage or refinanced after 12/15/17.

Moving expenses are no longer deductible except for the military.

Taxes are deductible up to $10,000 in 2018. This includes both sales tax & real estate tax on your
residence. Please call and talk to me about taking a home office deduction under an accountable
plan to lessen the burden of this if you work from home.

Casualty losses are no longer deductible unless the loss is attributable to a federal declared disaster
area. If you withdrew for a 401K for IRMA, you could possibly avoid the 10% penalty.

There are big changes in depreciation expense that cannot be detailed here. Bonus depreciation,
Section 179 and class lives all changed effective 9/28/17. You can no longer defer the gain on sale of
business equipment & automobiles by trading them in for a newer model.

Net operating losses cannot be carried back 2 years beginning in 2018. Carry forward for 20 years.

The estate tax deduction increased substantially with no changes to step up basis (date of death value).

The tax rates have been decreased so most lower/middle income taxpayers will pay less tax. I will post
the new tax brackets on our website. Mikschcpa.com

The alternative minimum tax was changed for individuals so most taxpayers will not incur this tax
anymore. The AMT was eliminated for Corporation for 2018.

Capital gain/dividends are still taxed at 0% if you’re below the 15% tax bracket, 15% for others except
20% for those in the 37% tax bracket. The 3.8% surtax for income >$200K/$250K still apply.

In 2018 you cannot reclassify a Roth IRA that you previously converted back to a traditional IRA.

Medical expenses for 2017 & 2018 have to exceed 7.5% of AGI and increase to 10% beginning 2019.

Section 529 plans can now be used for elementary or secondary schools and not just higher education.

Miksch & Company, CPA, PA.


Tel : (727) 367-1040 Email : mikschcpa@msn.com