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2018 Tax Law Changes that are Directly Reported on Form 1040

October 3, 2018


As a reminder, the Tax Cuts and Jobs Act made a number of changes to provisions that are reported directly on Form 1040 or the new 1040 Schedules 1 - 6. Here are the provisions that will affect most taxpayers:

ACA Penalty for not having Health Insurance
Although not a change want to remind you that the shared responsibility payment (penalty) for not having health insurance still applies for 2018 federal returns.  Therefore if an individual did not have health insurance for all or part of 2018 they will either need to qualify for an exemption and complete Form 8965 or include a penalty amount on Form 1040, Schedule 4, line 61.

The penalty goes away beginning in 2019.

Standard Deduction was increased beginning in 2018 to:

  • $12,000 – Single
  • $24,000 – Married Filing Joint
  • $18,000 – Head of Household

The additional standard deduction for the Aged and Blind still applies.

Exemptions were eliminated. Therefore the exemption boxes for the taxpayer, spouse and dependents were eliminated and the line for totaling the exemptions were removed from 1040.

Child Tax Credit had the following changes:

  • Increased the credit to $2,000 per child of which $1,400 is eligible to be refundable. The age limit to qualify for the child tax credit remains at children under the age of 17.
  • Child must have a Social Security Number to be eligible for the child tax credit.
  • The earned income threshold for the refundable portion of the child tax credit has been lowered to $2,500.

Other Dependent Credit

  • Created new $500 nonrefundable other dependent credit for:
    • Children that are 17, 18, or students
    • Other qualifying dependents
    • Qualified children under 17 with an ITIN

Moving Expenses

  • The moving expense adjustment to income (Form 1040, Schedule 1, 26) is only allowed for members of the armed forces.
  • Moving expense reimbursements may no longer be excluded from income.

Tax Rates
The tax rates and brackets for 2018 for Single and Married Filing Joint filing status’ are:

Rate

Unmarried Individuals

Married Filing Joint

10%

Up to $9,525

Up to $19,050

12%

$9,526 - $38,700

$19,501 - $77,400

22%

$38,701 - $82,500

$77,401 - $165,000

24%

$82,501 - $157,500

$165,001 - $315,000

32%

$157,501 - $200,000

$315,001 - $400,000

35%

$201,001 - $500,000

$400,001 - $600,000

37%

Over $500,000

Over $600,000

For more information on the above provisions and other provisions in the Tax Cuts and Jobs Act see the following:

Recent Tax Updates

2018 Depreciation Changes
October 18, 2018

2018 Tax Law Changes that are Directly Reported on Form 1040
October 3, 2018

IRS Tax Transcripts Changes
September 27, 2018

Revised 2018 Schedule A due to Tax Cuts and Jobs Act Changes to Itemized Deductions
August 29, 2018

2018 Expansion of Preparer Due Diligence Requirements
August 8, 2018

IRS Accepting Renewal Applications for ITINs Expiring at End of 2018
July 25, 2018

Additional Updates
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