The US tax code has witnessed some major revisions for both companies and individuals. As a statement of fact, this present tax reform represents the most significant tax reform in the past 30 years. The bill to revise the tax laws in 2018 was named “An Act to provide for reconciliation according to titles II and V of the concurrent resolution on the budget for the fiscal year 2018.” But it called “ the Tax Cuts and Job Acts” since its introduction in 2017. Since the law deals with the citizens of a country, it’s therefore paramount for you to know how it affects you. Here is a guide to the most significant changes of the new tax reform in 2018.
ESTATE TAX
Also known as death tax because it is levied on significantly large estates that are inherited. The new estate tax amounts to $22.4million for a couple and $11.2million per individual.
STATE AND LOCAL TAXES
This has therefore limited $10,000 for both income and property tax paid as an itemized deduction which is paid during the year.
MORTGAGE INTEREST
Any Interest deduction on mortgage loan balances taken out after 15th Dec. 2017 will be capped at $750,000.
ALIMONY
The new tax rule on Alimony is that the person making maintenance payment or making alimony won’t be the one to deduct the tax and the receiver will not claim such amount as an income.
ALTERNATIVE MINIMUM TAX
This time, fewer households will face it. This new rule takes effect from Jan 1st, 2018. Starting at $109,400, a married couple that files jointly will face an exemption. And the exemption begins at $70,300 for all taxpayers aside from trusts and estates. As for the phase-out thresholds, it will rise to $1,000,000 for couples filing jointly while individual taxpayers will be $500,000.
CHILD TAX CREDIT
As for the child tax credit, the new tax law has doubled the amount to $2,000 per qualifying child. Also, there is a $500 non-refundable credit for any dependent other than a qualifying child. This rule will take effect from 2025.
Do you wish to know more about the 2018 new tax reform and how it affects you specifically? Then contact with us Flex Tax and Consulting Group. And we will assist you with your inquiries.
