2018 Tax Law Changes From Your Bethesda Tax Attorneys Part 2

2018 Tax Law Changes From Your Bethesda Tax Attorneys Part 2

Our country has seen big changes in recent years, including the direction of our presidency. Regardless of your political affiliations, the 2018 tax year has undergone several updates that Congress has approved. We all have to pay taxes, and as an American citizen, it falls on you to keep up to date on annual changes enforced by the IRS. Failing to stay abreast of modern tax law can leave you open for a number of concerns, including considerable fines and tax evasion penalties. Since 2000, JDKatz has served as a trusted team of tax attorneys in Maryland, delivering staunch representation and comprehensive support through the complex system to help optimize your outcome. Our diverse team provides a wide range of legal services, including estate planning, business structuring, and more. We’re here to help you, whether it’s for tax advice or full litigation.

We help clients through a wide range of problems, including tax fees levied for incorrect filings. Today, we’ll continue to discuss a few of the biggest changes for 2018. If you haven’t filed your tax return yet, time is running out! Be sure to speak with our tax experts today for assistance.

2018 Tax Changes

So far, we have highlighted new updates regarding increased standard deduction amounts, lowered tax brackets to reduce tax liabilities for most Americans, and a new limit on standard deduction amounts for local and state taxes. Every individual is different, so be sure to read below to see if the following three tax changes apply to your filing. Remember that these changes are not representative of all of the nuances of current tax law, so be sure to consult with our experts or the IRS for a complete list of updates.

Change Four: Elimination of Personal Exemptions

One of the most seemingly drastic changes for this tax season comes in the form of the personal exemption. Similarly to claiming a standard deduction, a personal exemption is a pre-set amount that ultimately reduces your taxable income for that calendar year. The more exemptions you have, the less you’ll be taxed from your income. In 2017, you were automatically counted as one exemption. If filing jointly, your spouse can be counted as a second exemption. Dependents such as your child also fall into this category. The amount per exemption for the 2017 tax year was $4,050, meaning that a family of six with a couple who filed jointly could expect to lower their taxable income by $32,400.

In 2018, personal exemptions have been eliminated. Based on your situation, this rule can result in major changes compared to previous filings. Adults with multiple children should expect to see an increase in their taxes. Keep in mind that there are other changes that can offset this increase, such as the Child Tax Credit, which is has doubled since the 2017 year.

Change Five: Changed Alternative Minimum Tax Amounts

If you reside in a household with a higher income than average, you may be subject to AMT. An alternative minimum tax is a supplemental income tax that was enacted by our government that has taxpayers calculate a different system to determine their total liability. Your AMT will be done alongside your regular income tax, with the outcome now being that you will need to pay whichever amount is higher. This process was originally created to keep the very wealthy from abusing certain privileges, and today affects just over five million Americans.

This year, the exemption amount for the AMT has increased to $70,300 for individuals or $109,400 for married couples who file jointly. This exemption begins to diminish at the $500,000 dollar limit for individuals, reducing the likelihood that you will face an AMT declaration. AMT laws are very complicated, so we recommend speaking with your local tax attorneys for assistance if you are dealing with this alternative tax system.

Change Six: Increased Estate Tax Exemptions

As a continuation of 2018’s theme, estate tax exemptions this year have also doubled. This figure is the dollar amount that you can leave to your heirs upon passing without having to pay federal estate taxes. This year, the amount sits at roughly 11.2 million dollars for single filers and 22.4 million for jointly filing couples.

For most Americans, this change will have little effect on their lives. However, it’s important to remember that this increased exemption amount will return to its previous levels, essentially halving the new amount of $11.2 million. If your estate plan does not account for this future change, it’s important to find qualified estate planning attorneys to help you plan for these possible outcomes.

Change Seven: Lowered Minimum Medical Deductions

One big change for recent tax years that can affect citizens with considerable medical expenses is the percentage of their total medical bills weighed against their annual income. If your cost for medical needs exceeded 10 percent, under the old rules, you could itemize these costs to lower your taxable income. In 2018, taxpayers can qualify for this deduction if their bills total 7.5 percent. A 2.5 percent decrease may be enough of a change for many Americans to qualify. You need to know that this decrease will jump back to 10 percent next year, so if you have any expensive medical procedures or prescription needs, it may be cost-effective to get that done under this change. Our experienced lawyers can help you with comprehensive estate planning to plan for tax outcomes, offering expert tax advice to optimize your outcome.

When it comes to tax law, annual updates can result in big changes for nearly every citizen in this country. Tax season is upon us again, leaving many people stressed and worried about their tax bill. Being accurate in your filing will help to avoid a myriad of risks such as amendments, unexpected costs, or audits. If you’re in need of a professional tax attorney in Maryland, the professionals at JDKatz are here and ready assist. For 18 years, our tax lawyers have worked to optimize the outcomes for each of our clients, providing comprehensive knowledge and personalized support to improve your life. Contact us today to learn more about our tax services.

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