Thursday, January 18, 2018

2018 Clergy Tax Update


President Trump recently signed the tax reform bill into law, and it makes major changes to the U.S. tax code for both individuals and corporations. In fact, the bill represents the most significant tax changes in the United States in more than 30 years.

While many deductions are remaining under the new tax law, there are several that didn’t survive. Gone for the 2018 tax year are the deductions for:

  • Casualty and theft losses (except those attributable to a federally declared disaster)
  • Unreimbursed employee expenses
  • Tax preparation expenses
  • Other miscellaneous deductions previously subject to the 2% AGI cap
  • Moving expenses
  • Employer-subsidized parking and transportation reimbursement
Republicans were unsuccessful in their efforts to repeal the Affordable Care Act, otherwise known as Obamacare, in 2017. However, the tax reform bill repeals the individual mandate, meaning that people who don’t buy health insurance will no longer have to pay a tax penalty.

It’s worth noting that this change doesn’t go into effect until 2019, so for 2018, the “Obamacare penalty” can still be assessed.

The standard deduction has roughly doubled for all filers, but the valuable personal exemption has been eliminated. For example, a single filer would have been entitled to a $6,500 standard deduction and a $4,150 personal exemption in 2018, for a total of $10,650 in income exclusions. Under the new tax plan, they would just get a $12,000 standard deduction.

It’s important to point out that most of the changes to individual taxes made by the bill are temporary — they’re set to expire after the 2025 tax year.



Sources: I.R.S.; House Ways and Means Committee | Proposed deduction amounts are comparable to the current 2017 levels and would increase with inflation in 2018.

Source:  Clergy Tax. com

No comments:

Post a Comment