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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 Look for Form 1040
Your income tax package has a new look. The 2019 Income Tax Package includes the Federal Income Tax and Benefit Guide, a Provincial or Territorial Information Guide, the return, schedules, and worksheets. For 2019 and future tax years, some of the line numbers that were previously 3 and 4 digits are now 5 digits. We have made several changes to this package to enhance our services. These changes include: using plain language where possible reducing the number of forms by eliminating Schedule 1 and the Worksheet for Schedule 1. You can now find any charts that were on these forms on the Income Tax and Benefit Return and the Worksheet for the Return updating worksheets to simplify certain calculations increasing font size and white space

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?


The information on this website, and the use of this website, are both provided without warranty of any kind. Income tax rules change every year and some information may be out of date. All readers wishing to take advantage of the information offered here should consult a qualified income tax preparer. In no event will Brad Howland, Howland Tax Services, or this website be liable for any damages, including lost profits, arising out of the information offered on this website, or the usage of this website. All material on this website Copyright © 2001-2020 by Howland Tax Services, Inc. Please contact us for permission to use this material in any form. Website designed and maintained by Brad Howland.