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Understanding How the New Tax Laws will affect me


Posted: January 29, 2018 at 12:00 AM by Alan Tucker

There has been a lot in the news lately about new tax laws, what they mean and when they will go into effect.  With tax season here, people are becoming unsure of what it all means not only to their tax return but to their pocketbook.  Here are some answers to some of your most burning questions about the new tax law.

When does it go into Effect?

The good news is that these new laws will not affect your 2017 taxes.  These are the ones that are doing this coming April.  Most of the provisions in the new tax law affecting individuals and businesses don’t go into effect until January 2018.  For example, new tax brackets went into effect January 1 of this year. 

Unfortunately, not all provisions will affect 2018’s taxes.  This is why there is so much confusion surrounding the new laws.  Changes for tax deductions for alimony payments will kick in for divorces that happen after December 31, 2018.  The penalty for not having health insurance will be eliminated in 2019. 

How Does the Amount of Income Calculation Change?

The new bill does not change the calculation, and is still complicated under the new tax bill.  It does raise the amount of income that would be exempt when you calculate taxable income under rules for the amount of income calculation.  For those who are single, the exemption level will increase by 77%.  For married couples filing jointly, it increases by the same percentage. 

Mortgage Deduction?

It is important to do your homework and know that homeowners may no longer be able to deduct all state and local property taxes plus income or sales taxes.  Instead, the new law allows individuals to deduct up to $10,000 in property taxes and state and local income or sales taxes. 

Tuition Waiver?

The good news is that the new bill spares graduate students from having to pay income tax on tuition waivers.

Child Care Credit?

The new tax law doubles the current child tax credit from $1,000 to $2,000 per child under age 17.  It also allows parents to collect a refund of up to $1,400 if the credit is larger than their federal income tax liability.  The child care credit will be available now to high earners.  It raises the income threshold under which filers may claim the full credit to $200, 00 for single parents, and to $400, 00 for married couples.

This is just a quick overview of what the new tax law entails.  It is a good idea to do your own research before taxes are due next year.  If you are well informed, the more likely you will be to get the most from your refund. 

 

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