2018 - Linkenheimer LLP CPAs & Advisors

Capital Gains Provisions Conformed

The adjusted net capital gain of a non-corporate taxpayer (e.g., an individual) is taxed at maximum rates of 0%, 15%, or 20%.

Under pre-Act law, the 0% capital gain rate applied to adjusted net capital gain that otherwise would be taxed at a regular tax rate below the 25% rate (i.e., at the 10% or 15% ordinary income tax rates); the 15% capital gain rate applied to adjusted net capital gain in excess of the amount taxed at the 0% rate, that otherwise would be taxed at a regular tax rate below the 39.6% (i.e., at the 25%, 28%, 33% or 35% ordinary income tax rates); and the 20% capital gain rate applied to adjusted net capital gain that exceeded the amounts taxed at the 0% and 15% rates.

New law. The Act generally retains present-law maximum rates on net capital gains and qualified dividends. It retains the breakpoints that exist under pre-Act law, but indexes them for inflation using C-CPI-U in tax years after Dec. 31, 2017. (Code Sec. 1(j)(5)(A), as amended by Act Sec. 11001(a)) For 2018, the 15% break point is: $77,200 for joint returns and surviving spouses (half this amount for married taxpayers filing separately), $51,700 for heads of […]

By Linkenheimer LLP|2020-09-03T20:04:47+00:00January 8th, 2018|capital gains, New Tax Laws|0 Comments

Personal Exemptions Suspended

Under pre-Act law, taxpayers determined their taxable income by subtracting from their adjusted gross income any personal exemption deductions. Personal exemptions generally were allowed for the taxpayer, the taxpayer’s spouse, and any dependents. The amount deductible for each personal exemption was scheduled to be $4,150 for 2018, subject to a phaseout for higher earners.

New law. For tax years beginning after Dec. 31, 2017 and before Jan. 1, 2026, the deduction for personal exemptions is effectively suspended by reducing the exemption amount to zero.

By Linkenheimer LLP|2020-09-03T20:04:47+00:00January 8th, 2018|New Tax Laws, Uncategorized|0 Comments

Standard Deduction Increased

Taxpayers are allowed to reduce their adjusted gross income (AGI) by the standard deduction or the sum of itemized deductions to determine their taxable income. Under pre-Act law, for 2018, the standard deduction amounts, indexed to inflation, were to be: $6,500 for single individuals and married individuals filing separately, $9,550 for heads of household, and $13,000 for married individuals filing jointly (including surviving spouses).

Additional standard deductions may be claimed by taxpayers who are elderly or blind.

New law. For tax years beginning after Dec. 31, 2017 and before Jan. 1, 2026, 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. No changes are made to the current-law additional standard deduction for the elderly and blind. (Code Sec. 63(c)(7), as added by Act Sec. 11021(a))

By Linkenheimer LLP|2020-09-03T20:04:48+00:00January 5th, 2018|deduction, New Tax Laws|0 Comments

New Health Saving Account Limits for 2018

The Internal Revenue Service released the 2018 inflation-adjusted limitations for health savings accounts.

In Revenue Procedure 2017-37, the IRS said the annual contribution limitation on deductions for an individual with self-only coverage under a high deductible health plan is $3,450. For calendar year 2018, the annual limitation on deductions for an individual with family coverage under a high deductible health plan is $6,900. HSAs typically require high deductibles, but they allow people to set aside money from their paychecks on a pre-tax basis for medical expenses.

For calendar year 2018, according to the IRS, a “high deductible health plan” is defined as a health plan with an annual deductible that is not less than $1,350 for self-only coverage or $2,700 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,650 for self-only coverage or $13,300 for family coverage.

For 2017, the lower limit on the annual deductible under a high-deductible plan was $1,300 for self-only coverage and $2,600 for family coverage, the same as for 2016. The upper limit for out-of-pocket expenses was $6,550 for self-only coverage and $13,100 for family […]

By Linkenheimer LLP|2020-09-03T20:04:55+00:00May 24th, 2017|hsa|0 Comments