This insider guide will give you an overview of the most important features of the new law which impacted individuals. The tax reform bills which were previously known as “Tax Cuts and Jobs Act” were approved by President Trump on December 22nd, 2017. It was referred to as the biggest legislative tax overhaul in the last 30 years. This act amends the individual tax bracket and marginal rate limit for most of the individual deduction which was previously allowed and changes the tax treatment of certain business income received by “pass-through” entity. Under the TCJA, the new standard deduction is double the earlier amounts. Moreover, tax reform has eliminated exemptions which taxpayer claim for their dependents and themselves.
This law has introduced a new structure for taxes which was imposed with seven tax ranges. The highest rate was turned down from 39.6% to 37% and refer to the income which is taxable beyond $500,000 for single taxpayers and $600,000 for a wedded couple who file together. The tax which stayed unaffected is child’s tax by the parent’s tax condition or the unearned wages of any siblings. Given below is the tax rate structure for 2018-2025.
TCJA canceled dependent and personal exemption which would have been worth around $4,150 for each taxpayer, eligible dependent and spouse in 2018. In place of the personal exemption, this law increased the child tax credit and created a tax credit of $500 for dependents which are not eligible for the child tax credit. The child tax credit phased out beginning at an income of $110,000 (for wedded filing joint returns and $75,000 for singles).
Standard and Itemized Deductions
This law doubles the standard cut from $13,000 to $24,000 for wedded couples who file jointly, $6,500 to $12,000 for single filers, and $9,500 to $18,000 for household heads.
It’s ruthless enough that you have to file a tax return. It’s worse when your return has some difficulties which come back to haunt you. The best way to avert these problems is to pick good tax preparation companies. For tax help, there are several tax preparation assistance companies who provide help and tax problem resolution. You work hard for your money, so save it by using one of the Tax Preparation Assistance sites across the state. They will help you prepare a tax return, and most of them will help you file your tax returns online.