During tax season the most common question asked was about the tax reform. How will it affect my 2018 tax return? Which expenses are still allowed? How can I plan to protect my self from owing a lot of money next year. Over the next number of months we will be going through certain changes made to the tax law.
Change #3 – Personal Exemption & Standard Deduction:
OLD LAW:
Under the old law, taxpayers were allowed to deduct a personal exemption $4,050 per person to reduce their taxable income on their tax return. As for standard deduction, taxpayers were allowed to deduct $6,350 for single status, and $12,700 for married filing jointly status. All these deductions were allowed to reduce the taxable income.
NEW LAW:
Under the new law, the personal exemption has been eliminated. As for the standard deduction, the deductible amount has increased for single status from $6,350 to $12,000, and for married filing jointly from $12,700 to $24,000. Many policymakers argued that the personal exemption was essentially merged into the standard deduction, but the rise in the standard deduction under tax reform wasn’t large enough to compensate for the loss of personal exemptions for some taxpayers.
You should seek advice from your tax professional when trying to determine how these changes will affect you.
If you have any further questions or would like talk to us about your tax and/or accounting/bookkeeping situation, call us for free consultation at (240) 676 – 0188 or email us at info@triuneaccountinggroup.com. At Triune Accounting Group it is our business to focus on your business, so you can focus on your business.