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Key provisions of the TAX CUT and JOBS ACT affecting individuals

December 26, 2017

 

Expiring after 12/31/2025 unless otherwise noted

  • Individual tax rate decreases ranging from 0 to 4% (depending upon the bracket)
  • Increases standard deduction to $12,000 and $24,000 for individuals and married filing jointly taxpayers, respectively.
  • Eliminates personal exemptions.
  • Child tax credit increases to $2,000 (partially refundable) per qualifying child, $500 nonrefundable credit for qualifying dependents other than qualifying children.  AGI phase-outs apply.
  • Deductions for state income and property taxes limited to $10,000. (half if married filing separately)
  • Repeal of Affordable care act individual mandate effective January 1, 2019
  • Suspends the deduction for the following items:
    • Home-equity debt.
    • Miscellaneous itemized deductions. (tax prep & investment fees, unreimbursed employee expenses, union dues, safe deposit box, etc)
    • Casualty and theft loss deductions. (unless federally declared disasters)
    • Moving expenses. (unless military in certain circumstances)
    • Alimony (agreements entered into after December 31, 2018)
  • Reduces the threshold for deducting medical expenses to 7.5% for all taxpayers for tax years 2017 and 2018
  • More expansive tax free Section 529 rules allowing distributions of up to $10,000 to be used for qualifying elementary and secondary school tuition and certain home schooling expenses.
  • Increase in the AMT exemption amount and phase-out thresholds.

 

Take action now:  There is still time to take advantage of a few tax tips as deductions in 2017 are projected to be more valuable than waiting until 2018.

·         Pay 2017 state taxes in 2017. (unless subject to AMT)

·         Prepay 2018 real estate property taxes in 2017. (unless subject to AMT)

·         Accelerate charitable contributions.

·         Prepay Miscellaneous itemized deductions.

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