Plain and Simple: Bright Business Insights Winter 2018 | 页面 3
Additionally, meals provided for convenience of a company’s
•
Standard deduction is set to increase. The standard deduction is
employees went from 100 percent deductible to 50 percent increasing across the board and is indexed for inflation for years
deductible. After 2025, meals will become nondeductible. Finally, after Dec. 31, 2018. The deduction for the elderly and the blind
van pooling and other transportation benefits are disallowed for remains intact. The increased standard deduction amounts are set
employers, and are nontaxable for employees. Bicycle commuting to sunset after Dec. 31, 2025, and are effective beginning after
reimbursements, however, are deductible by the employer, but not Dec. 31, 2017. They are $24,000 (married, filing jointly), $18,000
the employee. (head of household) and $12,000 (single). Given these increases,
it will no longer make sense for many taxpayers to itemize their
Changes In Store For Individuals
deductions. Medical expenses are deductible to the extent they
From an individual taxpayer perspective, highlights include:
exceed 7.5 percent of adjusted gross income for all taxpayers
instead of the previous 10 percent for most taxpayers.
•
Tax rate adjustment. With the passage of the TCJA, individual
•
Personal exemptions are suspended. The new law suspends
tax rates are now lower at 10, 12, 22, 24, 32, 35 and 37 percent, the deduction for personal exemptions. Thus, beginning in
which are set to expire after 2025. Capital gains and qualified 2018, taxpayers can no longer claim personal or dependency
dividends will retain present law maximum rates of 15 percent exemptions. The ru les for withholding income tax on wages will
and 20 percent plus the 3.8 percent surtax, where applicable.
Additionally, the “kiddie tax” rules were simplified. Now the
be adjusted to reflect this change.
•
A new deduction for “qualified business income.” Starting in
child’s tax is unaffected by the parent’s tax situation or the 2018, individual taxpayers are allowed to deduct up to 20 percent
unearned income of any siblings. of qualified business income or pass-through income (i.e., income
from partnerships, S corp, LLCs and sole proprietorships plus
trusts and estates). The income must be from a trade or business
within the U.S. Professional services and investment income does
not qualify, nor do amounts received from an S corporation as
reasonable compensation. The deduction is not used in computing
adjusted gross income, just taxable income. Other rules do apply.
•
The child and family tax credit is going up. This credit has been
increased to $2,000 from $1,000 and increases the refundable
portion of the credit for qualifying children younger than 17 to
$1,400. Additionally, there is a new (nonrefundable) $500 credit
for a taxpayer’s dependents who are not qualifying children.
•
State and local taxes. There is now a total limit of $10,000 for the
itemized deduction for state and local income and property taxes
starting in 2018.
Even though the TCJA appears daunting, your Rea & Associates
advisors are here to answer any questions you may have. Additionally,
the Rea team is also available to discuss tax strategy that could help
maximize your savings.
by: Tom
Jeffries, CPA
Principal
212 North Washington St.
Millersburg, OH 44654
(330) 521-4533
[email protected]