{"id":14652,"date":"2018-01-26T16:20:29","date_gmt":"2018-01-26T21:20:29","guid":{"rendered":"https:\/\/gtm.com\/household\/?p=14652"},"modified":"2024-08-26T15:50:42","modified_gmt":"2024-08-26T19:50:42","slug":"tax-reform-may-impact-family","status":"publish","type":"post","link":"https:\/\/gtm.com\/household\/tax-reform-may-impact-family\/","title":{"rendered":"How Tax Reform May Impact Your Family"},"content":{"rendered":"
\"Tax

Tax reform made significant changes, which may impact your tax liability.<\/p><\/div>\n

Recent tax reform under the Tax Cuts and Jobs Act (TCJA) made significant changes to income tax rates, exemptions, deductions, credits, and more. These changes may impact your tax liability and determine whether you will owe more or less in taxes for 2018.<\/p>\n

Please note that these changes commence with the 2018 tax year and do not influence the current tax filing period.<\/p>\n

Here are the key provisions that may affect your tax liability under the new legislation.<\/p>\n

1. Removal of Personal Exemptions<\/h2>\n

TCJA repealed all personal exemptions. In 2017, you can claim a personal exemption of $4,050 for yourself, spouse and any dependents. Without these exemptions, a family\u2019s taxable income could increase especially for larger families.<\/p>\n

2. Increase in Standard Deductions<\/h2>\n

To help lessen the increase caused by the removal of personal exemptions, the standard deduction has been nearly doubled.<\/p>\n\n\n\n\n\n\n
Filing status<\/td>\n2018 (New)
\nStandard Deduction<\/td>\n		2017 (Current)
\nStandard Deduction<\/td>\n<\/tr>\n
Single\/filing separately<\/td>\n$12,000<\/td>\n$6,350<\/td>\n<\/tr>\n
Head of household<\/td>\n$18,000<\/td>\n$9,350<\/td>\n<\/tr>\n
Filing jointly<\/td>\n$24,000<\/td>\n$12,700<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

These amounts will be adjusted for inflation in subsequent years.<\/p>\n

For some families, the increase in the standard deduction may more than offset the loss of personal exemptions and they may see tax savings. However, for larger families, including those that support elderly parents, it may not be enough and they could see a tax increase.<\/p>\n

With the higher standard deductions, it may not be worthwhile for many households to itemize their deductions. In fact, the Joint Committee on Taxation estimates that 94 percent of households will claim the standard deduction for the 2018\u00a0tax year, up from about 70 percent now.<\/p>\n

3. Expansion of Child Tax Credit<\/h2>\n

TCJA doubles the child tax credit<\/a> to $2,000 for each child under age 17. It also expands the number of families who can take advantage of this credit. Currently, the credit is available to joint filers with an adjusted gross income (AGI) of up to $110,000 and $75,000 for all other filers. Going forward, the credit will be available to joint filers with an AGI of up to $400,000 and $200,000 for all other filers.<\/p>\n

4. New Qualifying Dependent Credit<\/h2>\n

For qualifying dependents other than children under 17, such as an elderly parent or college-aged children, the tax reform act includes a $500 credit, subject to the same income limits as the child tax credit.<\/p>\n

5. No Change to Child and Dependent Care Credit and Flexible Spending Accounts<\/h2>\n

While tax reform made a number of changes, the Child and Dependent Care Credit<\/a> remained intact. This credit allows parents to deduct qualified child care expenses such as daycare or a nanny\u2019s pay. The credit can be worth as much as $1,050 for one child under 13 or $2,100 for two children.<\/p>\n

Flexible Spending Accounts (FSA) have also been left in place. Parents can set aside up to $5,000 in pre-tax dollars through paycheck deductions and then use that money for qualified expenses.<\/p>\n

6. Expansion of 529 Plans<\/h2>\n

529 plans, tax-advantaged accounts for parents to save for their children\u2019s college education, may now be used to pay for K-12 education tuition and related educational materials and tutoring. Up to $10,000 per year from 529 accounts can be used tax-free.<\/p>\n

7. Updated Withholding Tables<\/h2>\n

The IRS recently updated its income-tax withholding tables in response to the tax reform legislation. You may have already seen these adjustments reflected in your paychecks or you will over the coming weeks.<\/p>\n

8. New W-4 on the Way<\/h2>\n

The updated withholding tables are designed to work with the current Form W-4 you filed to claim withholding allowances. The IRS is revising Form W-4 to reflect additional changes in the new law. Once released, you will be able to update your withholding by completing the new Form W-4.<\/p>\n

For tax advice specific to your situation, consult your accountant or other tax professional.<\/p>\n","protected":false},"excerpt":{"rendered":"

Recent tax reform made significant changes to income tax rates, exemptions, deductions, credits, and more. Here are the key provisions that may influence your tax liability under the new legislation.<\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[80,168],"tags":[172,170,173,171,169,174],"class_list":["post-14652","post","type-post","status-publish","format-standard","hentry","category-tax-wage-laws","category-tax-reform","tag-child-and-dependent-care-credit","tag-child-tax-credit","tag-flexible-spending-accounts","tag-qualifying-dependent-credit","tag-tax-cuts-and-jobs-act","tag-w-4"],"yoast_head":"\n8 Ways Tax Reform Impacts Your Tax Liability | GTM Payroll<\/title>\n<meta name=\"description\" content=\"Recent tax reform legislation made significant changes, which may impact your tax liability. 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