February 5, 2018
2018 Tax Changes for INDIVIDUALS
Effective date: 1/1/18 for most items. Most of it expires 1/1/26.
State & Local Income Taxes plus Real Estate Tax on primary home, plus Personal Property Tax capped at $10,000 ($5,000 for Married Filing Separate).
2% Itemized Deductions Eliminated
New Standard Deduction for 2018
Mortgage Interest Deduction
Alimony Effective for divorces after 12/31/18 – Alimony is no longer a deduction to paying ex-spouse and no longer income to recipient ex-spouse.
Moving Expense Deduction is no longer allowed. Also applies to employers.
Casualty Loss Deduction is no longer allowed except in Presidential Declared Disaster Areas.
Medical Expense Deductions Adjusted Gross Income threshold reduced from 10% to 7.5% but only for 2018 & 2019.
Alternative Minimum Tax
2018 Child Tax Credit
529 Plans You are now allowed to use $10,000 per year to pay for K-12 education tuition, materials and tutoring.
Kiddie Tax is modified.
Obamacare Penalty/Individual Mandate is eliminated effective 1/1/19.
New Tax Rates & Brackets – Most rates decreased and the brackets are expanded.
Estate Tax Exemption Increased from $5,490,000 (Single)/$10,980,000 (Married Couples) to $11,000,000 (Single)/$22,000,000 (Married Couples), effective 1/1/18.
2018 Tax Code Changes for PASS THROUGH ENTITIES
Effective Date: 1/1/18. Expires 1/1/26.
U.S.-Based LLCs, S Corps, Partnerships and Sole Proprietors, Real Estate Investors, Trusts and Estates, REITs and Qualified Cooperatives
2018 Tax Updates for C CORPORATIONS
OTHER Business Tax Updates for 2018
50% Entertainment Deduction is no longer allowed. Tickets to the Royals…no deduction allowed.
Business Meals are 50% deductible, including in-house employee meals (some were 100%)
Like-Kind Exchange allowed only with respect to real property not held primarily for sale. Repealed like-kind exchange for personal property (trucks, etc).
Section 179 expensing is increased to $1M, phases out starting at $2.5M.
100% Write-Off (Bonus Depreciation) of ‘Qualified’ Fixed Assets, effective 9/28/2017. Allowed for new and used equipment.
Luxury Auto Depreciation limits expanded. First year goes to $10,000 from $3,160.
Net Operating Loss
Farmers – several changes to this. Changes to asset lives, loss provisions, etc.
Long-Term Contracts – Percentage-of-completion required for $25M revenue (Old law was $10M).
Cash Method of Accounting gross receipts test increased to $25M
Domestic Production Activities Deduction (DPAD) repealed effective:
FMLA – New general business credit of 12.5% of wages paid to employees on FMLA if rate is 50% of wages normally paid.
This list is not all of the changes, and does not include all of the details and specifics, therefore should not be used verbatim without discussing the facts and your circumstances with us or your other tax advisors.
Feel free to call our office at 816.224.4195 if you have any questions.
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