proudly serving Clark and Champaign County. 

Tax cuts and jobs act

As you know, the “Tax Cuts and Jobs Act”  was passed which affects every taxpayer for 2018 through 2025.  This Act is the greatest tax cut in our lifetime with more than 130 new tax provisions which has changed the landscape of filing tax returns.  I have incurred many hours studying and researching the new Act.  A few important provisions of the Act affecting the majority of taxpayers are:


  • Taxpayers who have only W-2’s will see little or no change.  However, all other taxpayers will see quite a different form “look.” The IRS and the Treasury Department implied 2018 returns will comprise of fewer pages and take less time to prepare.  This is NOT the case! It will take longer to prepare with up to six (6) more pages added to the return.  Where did the simplification go?;


  • Taxpayers who itemized in the past may find it advantageous to use the NEW standard deduction this year.  The 2018 standard deduction for Married Filing Jointly and Surviving Spouses is $24,000 and a Single and Married Filing Separate taxpayer is $12,000.  Personal exemptions are no longer available, as this number, in theory, is included in the NEW standard deduction.  However, you will need to provide me with any addition to the family OR removal of a dependent.  If you itemized in the past, continue to gather those deductions this year (being a transition year) and I can determine which deduction is to your tax advantage…taking the new standard deduction or continue to itemize;


  • The tax rates were lowered for every taxpayer, including corporations;


  • Independent over-the-road truck drivers and traveling salespeople (as an employee) will no longer be permitted to deduct their meals, lodging, travel, and auto expenses.  I would suggest to contact your employer and ask for financial consideration to cover some or all of the lost deductions;


  • IMPORTANT: (Business only) Please bring your invoices on ALL equipment purchased.  For an asset purchased from an individual, a copy of your check is needed.  Equipment traded is no longer a “trade-in,” but is a “sale” and a gain/loss is calculated.  However, the newly acquired asset receives a higher depreciable basis;


  • Larger tax credits for children, e.g., doubling the child tax credit from $1,000 to $2,000;


  • State and local income taxes and real estate taxes are still deductible, but are now limited to $10,000 for  married taxpayers or $5,000 for married filing separate who itemize; and


  • Taxpayers who are engaged in a trade or business, including partnerships and S Corporations, with a profit are eligible for a NEW 20% DEDUCTION subtracted from your taxable income.  The 20% deduction computation is complex; however, the tax savings can be substantial.  


Also, please bring your driver’s license and spouse’s, if applicable, (or copy) with you.

I hope this information was helpful. If you have any questions please don't hesitate to call us. We look forward to helping you.


Sincerely,




George J. Giannrais

Owner

TAX TYME