2018 Tax Rates, Deductions, and 1099 Releases
Welcome to a New Tax Year! Doesn’t it feel so good? The answer is always the same in taxes… it depends. For some, they welcome in a year where their minimum deductions just went up by about 10-15%! For others (looking at you Californians), there may be some concern as to where some of their deductions went.
For those who routinely use the standard deduction, your deductions probably went up slightly. Most know that the new standard deduction has almost doubled to either 12,000 or 24,000 (single / married filings respectively), but what they may not know is their dependency exemptions are eliminated. Every person “claimed” as a dependent in a taxpayer’s household was given a tax exemption of roughly $4,000 each year (the amount was indexed to inflation so it goes up a little each year on average). That has been eliminated, so if you are a family of 5 in your household, your exemption of 20,000 has been eliminated. All hope is not lost, as you’ll see below, the rates have come down quite a bit. While some deductions are gone (like much of the State & Local Tax Deduction) there is some evening out to be done with lower rates.
See the table below to see a fuller look at the 2018 Tax Year Federal Marginal Tax Rates. Remember, these rates will apply to income earned in 2018. So the taxes you are about to file will follow tax rates from 2017. See our past post (HERE) for a look at the 2017 rates.
We will be discussing more nuances of the new tax plan all year, so stay tuned!
As a housekeeping note: Form 1099 and Form 1099R will be sent to all clients soon. Tax Laws indicate that Form 1099R (1099’s associated with retirement accounts) must be sent out by January 31, so those should arrive by the first or second week of February. Form 1099 takes a bit longer because of the more complex nature of calculating dividends, interest, capital gains, capital gains distribution and so on. Those typically will arrive end of February. However, the IRS does allow for a late distribution of March 15th. Please plan accordingly. Those tax forms will be mailed out, but you can also find them (when they become available) on your Online Account View.