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The Tax Cuts and Jobs Act (TCJA), passed in December 2017, resulted in several significant changes to the individual and business income tax. In fact, the new tax law is the biggest change in the U.S. tax regulation since 1986. The new law completely revamps the tax rules for both individuals and businesses. The changes for individuals generally take effect in 2018 and are then scheduled to vanish after 2025. Conversely, most of the provisions relating to businesses in the new law are permanent.
The changes are affecting 2018 federal income tax returns that must be filed in 2019.
When preparing 2018 federal income tax returns, there are following items that should be considered:
Increases in the standard deduction;
Changes to itemized deductions, including state and local tax (SALT) payments, mortgage interest, charitable contributions, casualty and theft losses and miscellaneous expense deductions;
Suspension of personal exemptions;
Removal of moving expense deduction and reimbursement exclusion;
Changes for Child Tax Credit (CTC) and other family-based credits;
Increase in alternative minimum tax (AMT) exemption amounts;
Repeal of deduction for alimony payments;
Reporting on health care coverage;
Rules for recharacterizing a Roth conversion;
Rules for retirement plan loans for employees leaving employment;
Changes for ABLE plans; and
Expansion of use of Section 529 accounts.
Due to many of changes in the TCJA, refunds may be different than prior years for certain taxpayers. Taxpayers should take into account all changes related to the tax regulation and take steps to ensure smooth processing of 2018 tax returns.
Taxpayers can access Publication 5307 at www.IRS.gov/getready, along with other important information and make sure to gather all necessary documentations they will need for filing and assemble these records in an organized manner.
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