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Tax Updates

Major Changes in 2018 Federal Taxes - How will they affect you?

- Are your itemized tax deductions higher then the new standard deduction?
- Should you do your own taxes or make a tax preparation appointment?

If you had your taxes done by Douglas Tax last year then you have a worksheet in the 2017 Client Copy of your tax return that shows how your 2017 taxes would have looked under the new 2018 tax changes.  Here are two examples of the "Potential Tax Cuts and Jobs Act Impact " worksheet you should look for, several pages before the end of your copy of the federal tax return: 

Example 1:  Jack Doe is single and has many business expenses for use of his car, home-office, telephone and supplies.  If his income and expenses are the same in 2018 (Tax Cuts and Jobs Act column), then he loses his personal exemption, $2,502 of his state taxes withheld and all of his business expenses.   The 2018 standard deduction is greater then his itemized deductions.  His 2018 estimated tax refund will drop by $4,963.

Example 2:  John and Jane Doe file a joint return.  They each have a salary and historically deduct itemized expenses because of significant state tax withholdings and property taxes.  If their income and expenses are the same in 2018 (Tax Cuts and Jobs Act column), then they lose all but $10,000 of their state and local taxes paid.   Their 2018 standard deduction is higher.  Because of a lowered tax rate, their estimated tax refund will increase by $4,105.

When you look at your Tax Impact Worksheet you might find that your standard deduction is a different amount than the examples above because you are a single parent or you and/or you spouse are older then 64.

If your itemized deductions (medical, state and local taxes, mortgage interest, charity) have increased since last year, don't assume the 2017 worksheet is accurate.

Tax Cuts and Jobs Act of 2017:

A look at changes approved by Congress in November 2018 that will affect federal taxes in 2018 and beyond, presented by Commerce Clearing House, a Walters Kluwer company:  



Changes affecting the
Tax Cuts and Jobs Act of 2017
:

 

It's a '.pdf' file so give it time to load*

*You will need Acrobat Reader for these '.pdf' files.  You can download a free copy by clicking the following icon:

                           

 

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Last modified: November 24, 2018