New Kiddie Tax

Kiddies Tax

Significant changes were made to the “Kiddie Tax,” a special levy on the “unearned” income of a child above $2,100 in 2018 and $2,200 in 2019. It typically applies to investment income such as dividends, interest, and capital gains, and is not applicable to the earned income of a young person from newspaper delivery or […]

Read more

New Child and Dependent Credits

New Child and Dependent Credits

At the end of the year, the overhaul doubled the maximum child tax credit from $1,000 to $2,000 for each child in a family under the age of 17. This credit is also eligible for many more families. For 2018, it begins to phase out at $400,000 of adjusted gross income for most couples and […]

Read more
New Mortgage Interest Deduction

The tax overhaul contains new restrictions, both indirect and direct, on mortgage interest deductions. By the end of 2025, these changes expire. According to IRS, the number of tax returns with a mortgage interest deduction will fall to approximately 14 million in 2018 compared to 32 million in 2017. One reason for the change is […]

Read more

Investment Income Taxes

Investment Income Taxes

The tax law did not changed the favorable rates for long-term capital gains and many dividends, and there is still a popular zero rate for these types of investment income. For 2018, the zero rate applies to jointly filed married couples who have a taxable income of up to $77,200 ($38,600 for singles). A rate […]

Read more

New Standard Deduction

New Standard Deduction

For many people, the most significant changes in the tax overhaul are the almost doubling of the standard deduction and the abrogation of the personal exemption. The standard deduction is the amount filers subtract from income if they do not break deductions for mortgage interest, charitable contributions, state and local taxes and other items in […]

Read more

Sale of a Home

Sale of Home

The tax overhaul retained the existing benefit for home sellers. Jointly filing married couples can exclude $500,000 from taxes on the sale of a primary home. The exemption for single filers is $250,000 in profit. For inflation, these amounts are not indexed. For example, say Sam and Suzan bought a home for $150,000 many years […]

Read more

New Personal Exemption

personal exemption

The abolition of the personal exemption is also a significant shift. This provision was a subtraction from income before the overhaul for each person included in a tax return-typically family members. The amount for 2018 was set to be $4,150 per person, and for higher earners it was phased out. Personal exemption was also essential […]

Read more

New SALT limit

SALT

The tax overhaul placed a limit on deductions for state and local taxes, known as SALT, in a landmark change. These deductions were previously unlimited for individuals, although many people who owed the alternative minimum tax lost some or all of their SALT write-offs. Taxpayers can deduct property and income taxes or sales taxes for […]

Read more
Choosing between Itemized and Standard Deduction

When filing your taxes, you will often have to choose between itemizing your deductions and taking a standard deduction. You should determine the amount of your deductions using both methods, then select which option reduces the amount of tax you owe. The method that leads to the greatest deduction typically provides the greatest credit. How […]

Read more

Non-taxable income

Non-Taxable Income

If you try to determine the difference between taxable and non-taxable income, remember one basic fact: All income that is not specifically excluded by law is taxable. In essence, any money you receive in the form of wages or tips for work is taxable. In addition, any revenue you earn from property or services, whether […]

Read more