Lopez Tax Service is proud to present some of the highlights from the Tax Cuts and Jobs Acts recently passed by Congress. Please call us at 888-575-4829 or visit us at LopezTaxService.com for more complete information.
How big of a cut does a corporation receive?
The new bill lowers the corporate tax rate from 35 to 21 percent.
How are the tax brackets affected?
The bill keeps the seven tax brackets while reducing the rates for five of them. The new rates are as follows 10 percent 12, 22, 24, 32, 35 and 37 percent. The 37 percent bracket applies to individuals whose income is over $500,000. For joint filers, the threshold is $600,000. This rate is being lowered from 39.6 percent.
Changes to standard deductions?
The standard deduction is going to be doubled, but personal exemptions are cut.
Is the child tax credit affected? Yes, under the new bill, taxpayers can claim $2,000 credit for each qualifying child under the age of 17. Only $1,400 is refundable. What constitutes a qualifying child?
I heard I shouldn’t buy a new home?
For new home owners, the mortgage-interest rate deduction will be available for mortgages up to $750,000. That’s down from $1 million, but is the only reason to buy a home the tax breaks or are there other reasons to buying property?
Penalizations for not having healthcare? No penalizations will occur for the year 2019, the new legislation eliminates the Affordable Care Act’s individual mandate or otherwise known as Obamacare.
Student loans and medical expense deductions?
The new tax bill keeps the current deductions for student loan interest. Additionally, the tuition waivers that are received by graduate students will remain tax free. The new legislation allows taxpayers to deduct medical expenses that exceed 7.5 percent their adjusted gross income
References
Congress. (2017). H.R.1 – An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018. Retrieved from congress.gov.
Frankel, M. (2017, December). How the Tax Cuts and Jobs Act Could Affect These 5 Households. Retrieved from Yahoo Finance.
Madeline Farber, S. C. (2017, December 20). Congress votes on tax bill: What the ‘Tax Cuts and Jobs Act’ means for you. Retrieved from Fox News.