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How To Prepare For Your 2018 Tax Return!

Ok, so it is December! It’s almost Christmas, New Year’s is right around the corner and you know what else? Yep, you guessed it, tax season!

This will be the first year that we see how the new tax changes apply to taxpayers. Here are some things you may want to keep in mind as the end of 2018 approaches.

The first thing is you should know that the tax brackets have been adjusted. For the most part they have been adjusted down, which could benefit many taxpayers. Here is what the brackets look like for 2018:

For unmarried individuals:
10%: if your taxable income is between $0 and $9,525.
12%: if your taxable income is between $9,526 and $38,700.
22%: if your taxable income is between $38,701 and $82,500
24%: if your taxable income is between $82,501 and $157.500
32%: if your taxable income is between $157,501 and $200,000
35%: if your taxable income is between $200,001 and $500,000

For married individuals filing joint returns:
10%: if your taxable income is between $0 and $19,050.
12%: if your taxable income is between $19,051 and $77,400.
22%: if your taxable income is between $77,401 and $165,000
24%: if your taxable income is between $165,001 and $315,000
32%: if your taxable income is between $315,001 and $400,000
35%: if your taxable income is between $400,001 and $600,000

For head of households:
10%: if your taxable income is between $0 and $13,600
12%: if your taxable income is between $13,601 and $51,800.
22%: if your taxable income is between $51,801 and $82,500
24%: if your taxable income is between $82,501 and $157.500
32%: if your taxable income is between $157,501 and $200,000
35%: if your taxable income is between $200,001 and $500,000

The second thing to consider is the change in itemized deductions.  There are several changes to how itemized deductions are calculated.  Medical expense threshold moved from 10 percent of a taxpayer’s adjusted gross income to 7.5 percent.

Charitable donations are still deductible, but the change is to non-cash contributions.  Taxpayers will no longer be able to take massive deductions for non-cash contributions without an appraisal in many situations.  This means if you give loads of clothing and equipment away to a non-profit organization it may be a good idea to have these contributions appraised by a professional appraiser (get the appraisal in writing) before handing them over to a non-profit organization.

Of course there is the much advertised limit to the S.A.L.T. (state and local taxes)  deduction of $10,000.00.  Investment fees, travel for work, publications, gambling losses, etc. that taxpayers were able to write-off has been eliminated in 2018.

The third thing to consider are the child related credits.  The personal exemption for each person on the return has been eliminated for tax years starting in 2018.  This could slightly effect large families. The child tax credit has increased from $1,000.00 per child to $2,000 per child for dependent children under the age of seventeen. There is a $500.00 credit for dependents that don’t qualify for the $2K credit.  Child related credits phase out for couples with incomes over $400K and individual taxpayers with an income of $200K or more.

These are the top three changes that the majority of Americans will need to be concerned about for the 2018 tax year.

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About Frederick Towles

Frederick Towles is an entrepreneur, author and professional coach on personal finance, recognizing, seizing and leveraging opportunities of all kinds. Frederick founded The Towles Group Inc. to address issues that relate to small businesses and individuals – accounting, taxation, asset protection, financial compliance, wealth creation, debt management and business management. He also founded Unlimited Expectations Inc. which provides tools for individuals to assist them in the areas of opportunity recognition, leadership and personal finance. Through the tools and services offered by these companies people are positioned to operate their lives and their businesses at optimal capacity.

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