Make America Rich Again! How to Win in Your 2018 Tax Planning
18 Dec 2018
Tax reform went into effect this year – will you come out on top? Here’s how you can make the most of your 2018 tax planning and keep more cash in your pocket.
The latest tax reform is coming into effect, and it’s making big changes to everyone’s 2018 tax planning. In fact, it’s almost doubled the standard deduction amount.
These changes are essential to know when maximizing your tax savings. This is one of the most expansive changes to the tax code in decades. Both individuals and corporations will see tax cuts that can lead to savings with the right paperwork.
Although the number of tax brackets remains the same, the rates will change. There are still seven brackets, but the income levels and percentages for each are altered.
To find out how to best plan your 2018 taxes with these new income brackets and rates, continue reading below.
New Bracket Limits
This is one of the biggest and most important changes to the tax code in this sweeping bill.
There are still seven brackets, but their rates are now 10%, 12%, 22%, 24%, 32%, 35%, and 37%. While two rates remain the same, the five other brackets see tax cuts by one to four percent.
The taxable income brackets have fallen and risen as well. They are as follows:
- The 10% bracket rises from $9,325 to $9,525.
- The 12% bracket rises from $37,950 (previously 15%) to $38,700.
- The 22% bracket falls from $91,900 (previously 25%) to $82,500.
- The 24% bracket falls from $191,650 (previously 28%) to $157,500.
- The 32% bracket falls from $416,700 (previously 33%) to $200,000.
- The 35% bracket rises from $418,400 to $500,000.
- The 37% bracket rises from incomes above $418,400 (previously 39.6%) to incomes above $500,000.
One of the greatest benefits taxpayers will see is the change to standardized deductions. These have almost doubled in amount.
Before, single filers could only deduct $6,500. On their next tax return, that amount jumps to $12,000. Joint filers will also see their standardized deductions increase from $13,000 to $24,000
Additionally, parents will be happy to see the child tax credit double from $1,000 to $2,000. It applies up into the $200,000 income range for single parents and $400,000 income range for couples.
Like the previous tax code allowed, filers can itemize state and local taxes to use as deductions on their tax forms. The new restriction, however, caps these deductions at $10,000 to keep states happy.
Mortgage interest is still deductible, but new homeowners (after December, 15th, 2017) will be capped at $750,000. Luckily, homeowners before that date are grandfathered in at $1 million. Interest on home equity credit and loans are still eligible for deductions.
Another benefit of this tax reform is seen in medical expenses. All filers can deduct out of pocket medical expenses should they exceed 7.5% of their adjusted gross income.
2018 Tax Planning
Tax planning is already difficult, but 2018 tax planning takes things to a new level. Individuals and corporations can no longer rely on their old methods with these new changes taking place.
Of course, it’s not the first time the tax reform has taken place. Still, considering all the jargon in the tax code, it’s best to hire an expert to maximize your return.
If you’re looking for financial advising or a professional financial planner, check out Solera Asset Managers. Our high intention and high service approach will keep you tax efficient.
Please don’t hesitate to contact us with questions.