This week we will address some dates for the 2018 tax season and also begin to look at some provisions in the new tax reform bill passed in late 2017, which will primarily affect returns for 2018 through 2025.
The IRS has announced they will begin accepting electronic and paper tax returns on January 29, 2018.
They also reminded us that the earliest that refunds will be available for returns containing either the earned income tax credit (EITC) or the additional child tax credit (ACTC) will be February 27, 2018. This applies to the entire refund — even the portion not associated with the EITC and ACTC. The IRS expects the earliest EITC/ACTC related refunds for taxpayers who choose direct deposit to be available in taxpayer bank accounts or on debit cards starting on February 27, 2018, if there are no other issues with the tax return.
The following applies for tax years beginning after December 31, 2017, and before January 1, 2026:
There are seven tax rates that will apply for individuals: 10%, 12%, 22%, 24%, 32%, 35%, and 37%.
There are four tax rates for estates and trusts: 10%, 24%, 35%, and 37%.
The standard deduction is increased to $24,000 for married individuals filing a joint return, $18,000 for head-of-household filers, and $12,000 for all other taxpayers, adjusted for inflation in tax years beginning after 2018.
The deduction for personal exemptions is suspended and the exemption amount is reduced to zero.
The child tax credit is increased to $2,000. Other modifications to the child tax credit are:
The income levels at which the credit phases out are increased to $400,000 for married taxpayers filing jointly ($200,000 for all other taxpayers).
A $500 nonrefundable credit is provided for certain non-child dependents.
The amount of the credit that is refundable is increased to $1,400 per qualifying child, and this amount is indexed for inflation, up to the base $2,000 base credit amount. The earned income threshold for the refundable portion of the credit is decreased from $3,000 to $2,500.
No credit is allowed to a taxpayer with respect to any qualifying child unless the taxpayer provides the child's social security number.
Disclaimer: The items included in the Tax Tip Tuesday Video Blog are informational only and are not meant as tax advice. Consult with your tax advisor to determine how any item applies to your situation. IRS Circular 230 disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advise contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein