From January to April, all accounting firms will enter the sprint phase of helping customers file tax returns. Although the new tax law will not be used until the tax filing in 2019, the US CPA reminds everyone to plan early so as not to pay more taxes. Taxpayers discuss with the accountant when filing tax returns, according to their own income, compare the new and old tax laws, and see what they need to pay attention to in 2018.
The new tax law has less benefit to the middle class
Sophie Luo USCPA pointed out that the old tax law stipulated that each person's tax allowance was more than 4,000 US dollars, and the new tax law canceled this article, the standard tax deduction amount increased significantly, the single person increased to 12,000 US dollars, the couple's joint report increased to 24,000 US dollars.
According to the old tax law, Itemizing Deduction and Standard Deduction can be used to choose which one to use. Item-by-item deductions include common self-housing loan interest, real estate tax, state income tax, charitable donations, etc. For those with certain income, real estate tax and state tax reduction are considerable and can be used as part of the itemized tax deduction. However, the new tax law stipulates that these projects can only add up to $10,000, so these people have a lot of losses.
After the new tax law came into effect in 2018, the real benefits were those with relatively low income and considerable income. The original highest tax rate was 39.6%, and now it has dropped to 37%, and the threshold for the highest income has also increased. The $400,000 is subject to a 39.6% tax. Now the couple can report a maximum tax rate if they report a total of $600,000. The benefits are twofold. However, the middle class with an annual income of 300,000 US dollars to 500,000 US dollars, some people have to pay more taxes than the original, so be mentally prepared.
Sophie Luo
USCPA