Pat A Kimmer, CPA P.C.

Pat A Kimmer, CPA P.C.




2018 Tax News Updates

 2018 TAX NEWS UPDATE

Use the information below for your 2018 tax planning and estimated tax projections:

TAX CALCULATION FIGURES:

·      Updated for new law effective January 1, 2018 :

  • Personal exemption deduction eliminated
  • Itemized deduction changes:
    • Itemized deduction phase-out limitation eliminated
    • Medical expenses allowed for expenses over 7.5% of AGI
    • State and local taxes limited to a combined $10,000‚Äč for any combination of state and local property taxes or state and local income taxes or sales taxes
    • Home mortgage interest limited to the first $750,000 of acquisition debt
    • Home equity mortgage interest is no longer deductible
    • Casualty/theft losses are not deductible except for declared Federal disaster areas
  • Standard deduction increases to $12,000 (Singles/MFS) and $24,000  (Married Joint); 
  • Tax brackets are at the marginal rates of 10%, 12%, 22%, 24%, 32%, 35% and 37% 
  • Alternative Minimum Tax exemption is increased. AMT is a separate tax calculation to ensure taxpayers that use tax preference items pay a minimum amount of tax.  Ask me if you could be subject to the AMT and what to do to minimize your AMT liability.
  • Child tax credit is $2,000 per qualified child subject to phase-out for high-income taxpayers 

RETIREMENT PLAN OPPORTUNITIES:

  • Contribute up to $5,500 ($6,500 if you are age 50 or older) to a traditional or Roth IRA depending on whether you or your spouse are covered by an employer's retirement plan or the amount of your income
  • 401(k), 403(b), most 457 Plan Contribution limits at $18,500 as well as the $6,000 catch-up contribution for age 50 or older
  • SEP IRA limit is $55,000
  • SIMPLE limits remain at $12,500 ($15,500 for age 50 or older)
  • Consider the various retirement plan options for self-employed individuals or owners of small businesses

 EMPLOYMENT TAX PROVISIONS:

  • Social Security wage base $128,400 for maximum employee/employer social security tax of $7,960.80 (at 6.2% rate) (Note the wage based was changed from $128,700 to $128,400 on 11/27/17.)
  • Medicare Hospital Insurance portion applies to all wages (no limit) at 1.45% for both employers and employees
  • Additional Employee Medicare tax of .9% for wages over $200,000 for Single taxpayers and $250,000 for married taxpayers filing jointly

SOCIAL SECURITY EARNINGS LIMIT:

  • Earnings limit for workers receiving social security under full retirement age can make up to $17,040 before they lose any benefits
  • Earnings limit for workers receiving social security in year one reaches full retirement age can earn up to $45,360 
  • No earnings cap once a worker receiving social security turns full retirement age     

ESTATE AND GIFT:

  • Annual Gift Tax exclusion increases to $15,000 per year per recipient
  • Estate and gift lifetime exclusion for decedents dying in 2018 increases to $11.2 million