2018 TAX LAW CHANGES

The Tax Cuts and Job Act includes the following changes beginning January 1, 2018 (Note: These changes are only temporary through December 31, 2025):

FOR INDIVIDUALS:

The Standard Deduction is increased to:
Single - $12,000
Married filing Separately - $12,000
Head of Household - $18,000
Married filing Jointly - $24,000

The Personal Exemption has been replaced by an increased Child Tax Credit ($2,000 per child until the year they turn 17) and a $500 Qualifying Dependent Credit for your dependents that are not eligible for the Child Tax Credit.The income levels to claim these credits has also been increased to $200,000 for Single, Head of Household and Married Filing Separately and $400,000 for Married filing Joint.

Any child claimed for the Child Tax Credit must have a social security number.

Itemized deduction changes:

  1. Interest on a line of credit is only deductible for the portion that is used for home improvements.
  2. Only $10,000 in state and local taxes (sales, property, income, etc.) is deductible.
  3. Items previously included as part of the Must be More than 2% of Adjusted Gross Income Miscellaneous Deductions are not deductible.These items include employee business expenses, investment expenses, and tax preparation fees.

Moving expenses may only be deducted by active duty military on a permanent change of station.Employees who are reimbursed their 2018 moving expenses by their employers will include any reimbursements as W-2 income.If the 2018 reimbursements are for expenses incurred in 2017, employees may be able to deduct them on their 2018 return.

Business owners may qualify for a

Section 199A deduction. This deduction may be up to 20% of qualified business income depending on the type of business they own.

FOR BUSINESSES:

Entertainment expenses are no longer deductible.

For most businesses, Net Operating Losses may only be carried forward.

2018 PERMANENT FUND DIVIDEND was $1,600. This does mean that children will have to pay taxes on their dividend. A child's income (Form 8814) can be included on the parents' return if they only have non-W-2 income (the permanent fund, interest on savings accounts and dividends/capital gains on investment accounts) but if their income is more than $2,100, this may not be the best option. If they have W-2 wages, they do have to file their own return but you are still able to claim them as a dependent. For help with reporting their income, call or e-mail my office.

Alaska's minimum wage went up to $9.84 an hour effective January 1, 2018. It will be adjusted every year for inflation with the new rate being effective on January 1 of each year.

STANDARD MILEAGE RATES FOR 2018 went into effect on January 1, 2018:
54.5 cents per mile for business miles driven
18 cents per mile for medical or moving miles driven
14 cents per mile driven for charitable purposes