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United States Tax Changes for 2018

U.S. taxpayers have sweeping changes to contend with this year, including a major transformation of Form 1040, six new schedules, and modifications to Standard Deductions, Personal Exemptions, and Itemized Deductions.

New Design for Form 1040
The tax return itself has shrunk to "postcard" size in an attempt to make it easier to fill out. Most of the removed calculations were shifted over to six, new schedules though, so filling out a 1040 may now actually be more complicated for many. Forms 1040-EZ and 1040-A are now gone.

Change In Tax Rates
The federal tax rates have been reduced slightly in some brackets. The 2018 rates are 10%, 12%, 22%, 24%, 32%, 35%, and 37%.

Standard Deduction Greatly Increased
The new Standard Deduction amounts are:

BUT: Personal Exemptions Eliminated
Taxpayers can no longer claim a personal exemption for each of their dependents. Large families may therefore see higher taxable income, even with the increased Standard Deduction. The additional tax bite may be eased though by the child and dependent measures noted below.

Increased Child Tax Credit
The maximum child tax credit has increased to $2,000 per qualifying child, of which $1,400 can be claimed for the additional child tax credit. In addition, the modified adjusted gross income threshold at which the credit begins to phase out has increased to $200,000 ($400,000 if married filing jointly).

New Credit for Other Dependents
You may be able to claim this nonrefundable credit of up to $500 for each eligible dependent who can't be claimed for the child tax credit.

Changes to Itemized Deductions
If you elected to itemize deductions in the past, rather than use the Standard Deduction (because itemized deductions were higher), you'll want to know about the following major changes:

Alternative Minimum Tax (AMT)
Fewer taxpayers should be subject to AMT, as the exemption amount has increased to $70,300 ($109,400 if married filing jointly or qualifying widow(er); $54,700 if married filing separately), and the income levels at which the exemption starts to phase out have increased to $500,000 ($1,000,000 if married filing jointly or qualifying widow(er).

Moving Expenses
The deduction for moving expenses is now gone, unless you are a member of the Armed Forces on active duty, and due to a military order you move because of a permanent change of station.

Further Reading
IRS Publication 5307: Tax Reform: Basics for Individuals and Families
The Motley Fool: The New IRS Form 1040
CNBC: Confused About Tax Return Changes?


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