Are you old enough to remember when the IRS sent out their lovely Christmas mailings of tax forms before the end of the year? A Happy reminder before the bills from Christmas purchases came flooding in that Uncle Sam wants his money first.
2018 brought a historic change of the Individual tax form 1040 and the Congress’ idea of simplified tax preparation and tax cuts. These are called TCJA (Tax Cuts and Jobs Act). The forms look entirely different than in the past. Gone away are the forms 1040A and 1040EZ which were 2- and 1-page simple forms. Now we have 2 half pages and 6 schedules plus all the other forms that go with the more complex returns.
Here are the changes you need to know as an individual filer as we gather our papers and receipts for 2018:
Moving expenses are gone.
The standard deduction rises for all filers.
Single Individuals $12,000
Head of Household $18,000
Married Filing Jointly with a Spouse $24,000
Married Filing Separately from your Spouse $12,000
Anything above these amounts under Itemized Deductions can still be taken on Schedule A.
Itemized Deductions have changed. Gone away are:
Employee Business Deductions
Investment Interest costs (Advisory Fees)
Fees paid for Tax Returns
Hobby Expenses to the extent of Hobby Income
Casualty Losses Except for Federally Declared Disaster Areas with FEMA Numbers SALT (State, Area Local and property taxes) are capped at a total of $10,000 any amounts over that is not deductible
Charitable Deductions limits are now capped at 60% of your Adjusted Gross Income. You must provide documentation for gifts over $250 even if the Charity has reported your contributions.
Mortgage Interest is limited to a home mortgage not valued at more than 1 million dollars.
No Home Equity interest can be claimed UNLESS it can be proved that the loan was used to build, buy or improve the home.
Gone away are the Exemptions for all taxpayers and their Dependents There is an increase credit for children under 17 to $2000
All dependents must have valid Social Security Numbers to receive the credit
There is a $500 credit for all other dependents claimed on the tax return provided there are valid Social Security Numbers
The Mandate to have and pay penalties for the Affordable Care Act are still in place. Form 1095A from the Marketplace must be reconciled on the tax return or full year health insurance must be held with allowable providers to avoid the penalties.