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so this is our first look at 2018 tax
course with all the changes with the tax
cut and Jobs Act tcga J a rather you
know or the Trump tax at home whatever
you wanna call it so here on the Left we
have 2018 tax forms which are still in
draft mode meaning the IRS has not
approved these for final publication but
they're they're going to be close to
some of these are you know they tend to
make changes although all the throughout
the year but you know they'll release a
final pilot version when they open the
pilot which is usually end of January
and but then they'll make revision is
you know to various little tweaks here
and there throughout the year so this is
not going to be the final final final
version but it's going to be something
close to this and for comparison on the
right I put up 2017 and this is just
kind of a generic pro forma kind of
thing these are natural people these are
not Atlas those three members these are
just you know placeholders so the I
would kind of just add solve our 2018
tax software yesterday because we just
became available so in this case what
we're looking at is a married couple
gentleman Jane taxpayer they have two
kids and they both the kids are under
seventeen so they were qualified for the
child tax credit and additional child
tax credit and just as a number two pick
I put it in that they're making $50,000
a year so if we look at the the left
side of the screen we've got 2018 you
can see it looks a lot different than
this one it's you know this is supposed
to be theoretically a postcard size and
you know maybe in print it would be it's
it's basically half of an eight by
eleven sheet paper the top is your your
filer information that's pretty much the
same you know main first name last name
is those crude numbers house first name
last name social street number how
you're filing
you're single Mary Mary separate and
possible widower that was the signal
this box here laid out a little
differently exemptions so exemptions are
gone there's no longer exist so that is
one of those changes that that the tax
cut Jobs Act made so under the old
system which was 2017 and for basically
you claimed an exemption
meaning that you were saying that this
person is a resident of this tax
household and you've got a certainly
exemption of income for that amount so
in 2017 taxes you got four thousand
fifty dollars per per four thousand
fifty per person in the cat's household
so in this family of four
they had sixteen thousand two hundred
dollars of exemptions for poor people
which reduced you know any taxable
income behind that amount so that's sort
of just a gimme for the the IRS saying
that well that's costs money just glue
so there's an exemption for that which
is roughly roughly half half to
two-thirds of the federal poverty limit
for that family size so that's gone and
in the new system that was replaced by
increasing the standard deduction which
was you know for married couple was
twelve seven and also creating a tax or
increasing the tax credits for children
and creating a tax credit or other
dependents so if you have let's say you
know your your brother is disabled and
you know lives with you then you get a
five dollar or up to a five dollar
credit or his presence in your tax house
if you're taking care of your elderly
parents same pattern relevant person and
that's called the other dependents
credit which is a new thing and yeah so
the front page of 2018 is just kind of
summary you know who you are where you
live what kind of family where your kids
are
and we have this new column C credit for
other dependents so are there children
or the other so up to two thousand
dollars five dollars and then you go
sign and signing date really so we're
good at h2 we have what used to be over
unpaid one down here so we have the
income section so wages wages interest
so taxable interest factor what interest
so in the old firm they put them on
different lines 888 D and here they put
them on the same line just to conserve
space and see what they're into this
mandates of making a postcard size so
interest dividends that follows the same
IRAs and pensions so that's going to
lines 15 and 16 here and Social Security
benefits that was lying 20 on the form
and then total income so what we are not
seeing is a bunch of deliver rods
attacked will refund credits and or out
states of state and local income taxes
alimony receive business income capital
gains income other gains rental real
estate world to use partnership escorts
trust cetera farm income or loss
unemployment compensation and other so
that is all now combined into a schedule
where to go
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Schedule one which is basically all this
stuff so and then scrolling down we have
this section of adjustments to the gross
income which creates the adjusted gross
income and these are all you know
subtractions from this number
you know educator expenses if you're a
teacher certain business expenses for
reservists emeritus of fee basically
officials health savings account
deductions you need expenses Music's
that are gone and now it's well now you
moving expenses are kind of only if you
remember our forces and then what the
paid for stuff like that
so they've condemned for that magnets
they've shifted these other lines of
information to alternate schedules to
save space and create this postcard size
thing so then now we go down qualified
business income deduction so that is the
20% pass-through credit that accredit so
you know written number of things about
qvi and the it's it's gonna be
interesting so the the idea is that they
want to increase or support support
businesses you know investment in
businesses and all this kind of thing so
now with Schedule C Schedule ease
I think Schedule F will qualified the
the amounts coming through that are
positive are discounted 20% so if you
make let's say you make a fifty thousand
dollar salary and then you own your
thousand dollar pass-through profit from
something or other whether it's real
estate or you know a business or
something then instead of being taxed on
150 you get a 20 thousand dollar
deduction off that 100 so you only in
tax 130 and then I'm in subject to many
limitations and qualifications are all
accountable so then we've taxable income
which is the total income minus
deductions and that leaves us the tax
which is from 242 in this case and then
we have child tax credit or credit for
other dependents and any amount the
other amounts on the schedule 3 so we go
over there look at schedule 3 that
corresponds to this section on the old
forms form tax credit a child child
attendant care expenses application
credits retirement signify fusion
credits so on and then we are left with
total tats and then we get to
other taxes is solid color stuff
this section here let's get four you can
see here which is pretty much the same
and then we have total tax which in this
case is zero and then refundable credits
so refundable credits is your stuff like
you're earning credit your additional
child tax credit your American
Opportunity Credit their fundable
portion of that and you know your
payments that your II made and all that
custom so that is kind of the summary
you know schedule five we have you know
more of this cut out there so what's
interesting to me is that well you know
the promise that you're gonna have just
the postcard size thing is is only
accomplished by ignoring all these
schedules which was basically all the
same information you had before but just
on a piece of paper so you know take
that for what it's worth our standard
deduction obviously changed quite a bit
here we got 24 here we've got seven and
if we actually look at what this
composed of we see a couple more changes
so medical and dental you know we have
our cinema after ten exclusion factor
which is the same which is down from ten
percent under the obamacare rules so
that was a good change then we have our
our taxes our state local taxes whether
it's income or sales tax real estate tax
personal property taxes and then other
but now we have this slide enter the
smaller of mine cloudy and ten thousand
dollars five thousand dollars with
married filing separate so it's limiting
that your taxes your deductions for
taxes you're already paid $10,000 now
the majority of people that is not going
to be that big about it but for those
people living in high tax high property
tax states or very high very high sales
tax states then or very high contacts
you're gonna you might be bumpy
because it's so like in New Jersey it's
not that uncommon to have prior taxes of
you know ten twelve twenty thousand
dollars a year so those people are going
to lose out on productions that they had
under the old system similarly under the
home mortgage stuff the the old limit or
deductible interest was in million
dollars and now it's 750 and so far
mortgage insurance premiums has not been
addressed by cars so that's one of those
things they can remove every year saying
Lily's not doing this coming in this tax
year or not right now it is not and
that's probably what this space is
reserved for then we go down to just
cherry and that's pretty much the same
and then casualty and theft losses
becomes casualty and theft losses from a
federally declared disaster area so
under the old rules let's say you had
you know pipe burst in your house it
flooded and you know you had to spend
$50,000 and renovations sure a company
wouldn't do with it so now that those
kinds of things only qualify if they're
occurring in a federally declared
disaster area so you know last in place
step 2016-2017 rather we had a hurricane
Irma here in Portland so a lot of people
had a lot of damage from that you know
Bruce when those trees knocked down all
that stuff some play depending on where
you were and those were all occurring in
a thorough is declared disaster and
Congress action passed a special law
just dealing with those so arcane our
murderer came area and hurricane the one
that a Texas parent when they got my
head but if you were in those areas
affected by those hurricanes then you've
got a special calculation of casualty
losses but you know people in Minnesota
obviously weren't affected by this
article so if you were Minnesota and you
had some sort of property damage like
that you were able to deduct it and
under the new rules you can else
and then a lot of this stuff job
expenses and certain slate deductions
are more or less not so those changes
and limitations combined with the fact
that the overall number is now higher
you know coming from for a married
couple 12:17 up to 24 the vast majority
people I think are not gonna be able to
itemize deficit so that's going to be
one form of simplification I suppose
also tax rates of change you can see
here if you look up in the corner for
the same family same numbers a 2017 they
would early 236 dollars total I mean
they're withholding them on the salary
probably cover that and we've got refund
but under the new rules they're getting
refund at 12:58 so that is $15 less and
you know that's going to scale more or
less on you know throughout income so
you know Rachel lower and higher income
earners they're gonna have certain
limits but they always get so that's
going to that's going to scale along and
you know we have our for those higher
income earners they're more likely to
business owners so we have a qualified
business income deduction and yeah so
people are it's kind of a double-edged
sword here so the the filing season of
2018 I think is gonna be disaster
because all these problems are slowing
graph it's today November 27 and I
personally I'm skeptical that the IRS
will have everything ready on time for
another pilot I would not be surprised
to see some people being pushed into you
you know that very much
hopefully not April before all the
phones for their particular tax return
already we saw that a few years ago with
business tax returns
many of the homegrown available in March
and it just creates a giant pain for
everybody called
taxpayers people are wanting to pack
done
people want any refunds you know so I'm
expecting a similar kind of thing for
the set up an upcoming tax filing season
but who know maybe maybe the IRS will
get on the ball and everything ready
Hong Kong you know fingers crossed but
that is our you know quick look at fully
eighteens
tax people so you know if there are any
major changes I'll make it in our video
and we'll see how it goes