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How will the TCJA Impact 2018 Filing Season?

March 04, 2019

Many changes from the TCJA take effect this tax season. Read up on how filing might change for you or your business.

Have you downloaded our 2019 Tax Deadline Calendars? They can help you stay on top of important due dates this year. Even though the Tax Cuts and Jobs Act (TCJA) was introduced December 2017, many changes take effect this filing season. Here are a few highlights.

What did the TCJA change?

Individual returns:

  • The standard deduction: This has been nearly doubled ($12,000 for single filers, $18,000 for heads of household, and $24,000 for joint filers). See, Tax Reform FAQs: Are Personal Exemptions and Standard Deductions Still Allowed?
  • Itemized deduction: For some, there is no longer a tax benefit for itemizing deductions since the standard deduction has been increased. For those that do, good news, the itemized deduction phaseout rule for high-income taxpayers has been suspended. Check out our blog, The New Tax Law and its Impact on Itemized Deductions for more.
  • Child tax credit: This credit has been doubled to $2,000 per qualifying child. The TCJA introduces a new $500 credit that may be available for other dependents, like a disabled child of any age, a full time student under the age of 24, etc.
  • Federal estate tax: The TCJA increases the unified estate and gift tax exemption from $5 million to $10 million (indexed every year for inflation). This year the exemption, indexed for inflation, is $11.18 million (or $22.36 million for married couples)

Business returns:

  • QBI Deduction: The deduction is available to many business taxpayers (other than C corporations) for 2018 through 2025 with Qualified Business Income (QBI). Check out our blog, The QBI Deduction Is as “Easy” as 1, 2, 3.
  • Bonus Depreciation: The TCJA temporarily allows companies to fully deduct certain capital expenditures in the year they’re placed in service. This break essentially replaces the current 50% first-year bonus depreciation program.
  • Net Operating Losses (NOLs): For NOLs arising in tax years ending after December 31, 2017, the two-year carryback provisions are repealed, except in the case of certain losses incurred in the trade or business of farming. Instead, NOLs will carry forward indefinitely. In addition, for losses arising in tax years beginning after December 31, 2017, the NOL deduction is limited to 80% of taxable income (determined without regard to the deduction). Learn more here: Tax Reform FAQs: How are Prior NOL Carryforwards Treated?

Record retention reminder

When filing this year, bear in mind that you need to keep copies of your prior year tax returns for a minimum of three years from the due date or filing date – whichever is later. Wondering how long you should keep the rest of your documents? Download our record retention guide.

Questions? Reach out to us.

The TCJA…So Many Changes, So Many Questions…we can help you navigate this huge tax overhaul! Visit our Tax Reform Center for everything you and your business need to know, now.

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