Every year we gather up all our tax forms, deductions, and spreadsheets so that we can find out what we need to pay or how much we overpaid. While this process is still needed for the 2018 tax year, a lot has changed. Here a few of the major changes to look out for in 2018.
For 2018, the tax rates have come down at almost all the income levels except the lowest level, and the highest two levels. Below is the new tax table:
Gone are the distinctions between 1040EZ, 1040A, or 1040. Every taxpayer now files the simplified 1040. For individuals who qualify for additional deductions, adjustments, or credits there is supplemental schedules that go along with your 1040.
Despite the large increase in the standard deduction for 2018, you should still keep an eye on your itemized deductions. The standard deduction is now, $12,000 for Single, $24,000 for Married couples filing jointly, and $18,000 if your single and the head of a household. The best practice is to still gather up your itemized deductions and take the better of the two. It’s also important to note itemized deductions may still be very valuable on your state return.
Prior to the 2018 tax year, each person that qualified as your dependent helped to decrease your taxable income. The 2018 tax year eliminates the personal exemptions (worth $4050 of taxable income reduction in 2017), and doubles the $1000 child tax credit to $2000.