Taxes are susceptible to change every year as a result of legislative changes. That's why it's important for families to stay updated with the tax regulations. The IRS unveils changes annually, and 2018 is no different. Let's examine some ways that the 2018 tax law changes might affect you, so that you can stay on top of it for your family.
There are certain people that love to itemize their taxes in order to keep their records as detailed as possible. However, there is always the option for an individual or couple to utilize the standard deduction option. The reason why this might be advantageous is because it operates on a "no questions asked" basis.
There are rules, though: you can't deduct mortgage interest or utilize other itemized donations like charitable donations if you take the standard deduction. However, for those who don't want to have to support all of their records during an audit – it's obvious to see how the standard deduction is the most convenient option.
Those who are single taxpayers – or married but file separately – now have $12,000 standard deduction. This is quite the increase, as it's almost double the previous year's standard deduction of $6,500. Those who are married have a standard deduction of $24,000, which is much more than the previous deduction of $13,000.
Officials also dramatically increased the estate exemption tax. The base was $5 million, and it is now doubled to $10 million. Taking inflation into account, the estate exemption is $11.2 million for an individual and $22.4 million for a couple.
We all know that raising families can be tough, whether you're young adults or older. In an attempt to help keep more money in your pocket, the government increased child tax credits from $1,000 to $2,000. Keep in mind, however, that the child must be under 17.
Although this doesn't encompass all of the tax law changes, we hope that these tips prove helpful to you and your family.