Federal tax update part 2: 2017 and 2018 H.R.1


2017 versus 2018 tax rates: individual income tax rates in 2017 in percentage are 10, 15, 25, 28, 33, 35, and 39.6. The 2018 rates in percentage are 10, 12, 22, 24, 32, 35, and 37 and will expire on 2025, under H.R.1 “The Tax Cuts and Jobs Act”.

The corporate maximum tax rate is 35 percent in 2017 and 21 percent flat rate in 2018.

Personal excemptions:

$4,050 and is gone in 2018. In 2017 phase-outs for personal itemized deduction and personal exemption begins at: single $261,500, head of household $287,650, married filing joint and surviving spouse $313,800, and married filing separate $156,900.

Standard deuctions: If your combined itemized deductions for interests, taxes, medical and contributions are less than the following  amounts, use the following standard deductions:

A. Single: $6,350 (2017) to $12,000 (2018)

B. Married filing jointly: $12,700 (2017) – $24,000 (2018)

C. Married filing separately: $6,350 (2017) – $12,000 (2018)

D. Head of household: $9,350 (2017) – $(2018)

Child tax credit:  maximum credit amount is $1,000 in 2017 and $2,000 in 2018, refundable and non-refundable.

Alternative Minimum Tax (AMT) exemption amount increased. The AMT exemption amount is increased to:

A. Single:  $54,300 (2017) to $55,400 (2018)

B. Married filing jointly: $84,500 (2017) to $86,200 (2018)

C. Married filing separately: $42,250 (2017) to 43,100 (2018)

D. Head of household:  $53,300 (2017) to $55,400 (2018)

State and local taxes: In 2017 all deductible.  In 2018 maximum deduction is $10,000 (includes property taxes).

Mortgage interest: In 2017 limit is $1,000,000. In 2018 limit is $750.000.

What is new with social security tax?

A. aximum arnings: $127,200 (2017) to $128,400 (2018)

B.Social security tax rate:  6.20 percent, same for both 2017 and 2018

C. Maximum social security tax:  $7,886.40 (2017) to $7,961 (2018)

D. Maximum FICA self-employment tax:  $15,772.80 (2017) to $15,922 (2018)

E. Social security income before age 66 earning limit:  $16,920 (2017) to $17,040 (2018)

F. ocial security income in the year you turned age 66 earning limit:  $44,800 (2017) to $45,360 (2018).

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Disclaimer: Any accounting, business or tax advice contained in this communication is neither intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.

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Al-os & Associates  Accountancy Corporation provides accounting and tax services to individuals, corporations, LLCs and business entities. The Firm has a niche in defending taxpayers audited by the IRS and other governmental agencies.  

 

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