How Does the 2018 Tax Law Change Charitable Deductions?

The 2018 tax law has good news and bad news for charities and people who like to donate to them.

The good news is that the new tax law raises the limit on the amount of charitable donations that can be deducted in a year by 10%.  It used to be 50% of your adjusted gross income, and now it’s 60%.

The bad news is that charitable deductions only kick in as a tax break if your itemized deductions exceed the standard deduction – which is now significantly larger.  So while people who give lots of money to charities, big donors, will have a new incentive to keep giving, people who give small or medium sized donations might no longer get a tax break on those contributions at all.  They’d end up paying the same amount in their taxes with or without giving charitable contribution.

So if people are giving for the tax break, there could be a spike in big gifts, but we could expect a significant drop in small ones.

Find out how the new tax law affects you.  Contact a Tax Ninja for a consultation.

2018 Tax Law: What Deductions are Disappearing?

The new tax law does not cut graduate school tuition deductions or the deduction for teachers buying school supplies, as many had feared.  But a number of individual itemized deductions are going away in 2018.  Here’s a partial list:

  • Personal exemptions – you used to get $4,500 off of your taxes for you and every dependent. Now that’s gone.
  • Moving expense deductions (except for active military personnel)
  • Home equity loan interest
  • Professional license and regulatory fees
  • Parking and transit reimbursement from your employer
  • Required medical tests for a job
  • Continuing professional education
  • Tax preparation fees
  • Investment fees
  • Alimony deductions (though that doesn’t phase in until 2019)

And of course State and Local Taxes (SALT) deductions are now capped at $10,000.

Some of these changes could have significant social impact over time.  To see how they impact you, and how you can save as much money on your taxes as possible, contact Tax Ninja for a consultation. 

Did the 2018 Tax Law Really Repeal the Individual Mandate?

Yes and no.  Technically the new Republican tax law does not repeal the individual mandate, that’s still the law of the land.  But it does eliminate the penalty for not following the law, so in practice people can ignore it with no consequences.  If found guilty of violating it, they’d pay a whopping $0.

Is that in fact “repeal?”  That’s up to you to decide.  What we do is figure out the practical impact of the tax law on your financial life, so we can save you money.

2018 Tax Law Likely to Increase the Cost of Medical Devices

The most famous and far-reaching impact of the 2018 tax law on healthcare is likely the elimination of the “individual mandate” provisions of the Affordable Health Care Act.

But one small and less talked about provision of the 2018 Tax Law is a 2.3 percent tax on total sales of medical devices at the manufacturer and wholesaler level.   Taxes like these, on items ranging from pacemakers to stents to defibrillators, are almost always passed on to consumers, and can also have far-reaching impacts on the costs of the entire health care system.

This is what’s often known as an “invisible” tax – one that you’re not paying directly, but that you’re paying for somebody else – and it’s very difficult to adjust your own tax strategy to accommodate these increases.  The best tactic is to make sure you’re taking full advantage of those areas where smart preparation can save you money.

Save money on your taxes.  Contact Tax Ninja for a consultation

2018 Tax Law – What Happened to the Personal Deduction?

In 2018, the Personal Deduction is gone.  Poof.  Vanished.

Why do you care?  Well, because it let you deduct $4,500 of your taxes for yourself and every dependent.  So if you have a lot of dependents, you’re going to take a hit under the new tax law.

Will that be balanced out by the overall lower rate?  That depends on your specifics.  We can help you figure that out.  Contact Tax Ninja for a consultation

The Republican 2018 Tax Plan – Who Wins, Who Loses?

If your taxes are simple, and you don’t have a lot of dependents, the new tax law could be good for you.  You might not even need a tax professional.

If you’re pulling in the money, you’ve got ways of saving even more money on your taxes – especially if you can avoid the AMT and if you itemize.

But if you’ve got multiple dependents, there’s every chance you’re going to take a hit.   Maybe a substantial one.

Either way, the smart play is to get a Tax Ninja on your side.  Contact us for a consultation, to figure out how to make the system work for you.

 

2018 New Tax Law – Earned Income Tax Credit

The 2018 Tax Law has slightly increased the Earned Income Tax Credit.  What does that mean for you?  It depends on your income, and how many children you have.

Here’s the quick walk through, in chart form:

Filing Status:   No Children 1 Child 2 Children 3 or More
Income $6,800.00 $10,200.00 $14,320.00 $14,320.00
Single or Head of Household Maximum Credit $520.00 $3,468.00 $5,728.00 $6,444.00
Phaseout Begins $8,510.00 $18,700.00 $18,700.00 $18,700.00
Phaseout Ends $15,310.00 $40,402.00 $45,898.00 $49,298.00
 
Married and Filing Together Income $6,800.00 $10,200.00 $14,320.00 $14,320.00
Maximum Credit $520.00 $3,468.00 $5,728.00 $6,444.00
Phaseout Begins $14,200.00 $24,400.00 $24,400.00 $24,400.00
Phaseout Ends $21,000.00 $46,102.00 $51,598.00 $54,998.00

Need a longer walk through?  We can help with that.  Contact a Tax Ninja for a consultation

What are the 2018 Tax Brackets?

Here’s your 2018 tax bracket chart:

Unmarried Individuals, Taxable Income Over Married Individuals Filing Joint Returns, Taxable Income Over Heads of Households, Taxable Income Over
Percent Taxed: 
10% $0 $0 $0
12% $9,525 $19,050 $13,600
22% $38,700 $77,400 $51,800
24% $82,500 $165,000 $82,500
32% $157,500 $315,000 $157,500
35% $200,000 $400,000 $200,000
37% $500,000 $600,000 $500,000

We’ve got all the charts, including ones you probably don’t know about.  Contact Tax Ninja to find out which parts of the tax law can save you money.

The New Tax Law – Do I Need to Use the Alternative Minimum Tax? (AMT)

Here’s how you know:

A) Are you filing as an unmarried individual?

If so, will you have a total tax liability (after everything’s taken out) of $70,300 or more?

If the answer to both questions is “yes,” then you’ll be using the Alternative Minimum Tax.

B) Are married and filing your taxes jointly?

If so, will you have a total tax liability (after everything’s taken out) of $109,400 or more?

If the answer to both questions is “yes,” then you’ll be using the Alternative Minimum Tax.

Otherwise, the Alternative Minimum Tax is not your problem.

Need more things about the new tax law explained?

Talk to a Tax Ninja.  We save you money.  Click here for a consultation

What You Need to Know About the New 2018 Tax Law – Basic Deductions

The basic amount you can deduct from your taxes is going up!  How much:

  • You get $5,500 in increased deductions if you’re a single filer (for a total basic deduction of $12,000);
  • You get $11,000 in increased deductions if you’re filing as a married couple (for a total basic deduction of $24,000)

Does that mean you still need to itemize your deductions?  It depends on how many deductions you take.  Short answer:  The more money you make, and the more income streams you have and the more you want to itemize.

Talk to a Tax Ninja about the new law means for you.  Click here for a consultation