Emmaus Blog

What's Up with the New Tax Law?

Emmaus Homes - Thursday, April 12, 2018

Mid-April… That glorious time of year we all love to hate… Tax Day.

 
You have probably realized by now that the tax reform passed in December of 2017 is not effective until you file your 2018 tax return next year. (Confession: I had to double-check when I was doing my tax return.) But no matter how savvy you are about the new rules, tax season tends to cause us all to reflect back on our financial habits. And if you’re thinking about how you’d like to handle things next year, you might be wondering about the new tax laws. Of course, you should consult your tax professional about your individual situation, there are a few general trends to be aware of:

 

1) The Personal Exemption has been eliminated. This means that you no longer have an exemption for each member of your household. 

2) However, the Standard Deduction is increasing significantly. This refers to the “standard” or minimum portion of income that is not subject to tax and that can be used to reduce a taxpayer's tax bill.* For 2018 it will increase from $13,000 to $24,000 for those who are married filing jointly and from $9,550 to $18,000. There are other scenarios, but these are most common.
 
3) The child tax credit has doubled to $2,000 per qualifying child.

 

So, what does this mean? Experts predict that many households will see their taxes going down for 2018***, resulting in more income staying in your hands. (Hooray for you you!) It also means that households who previously itemized between $13,000 and $24,000 in expenses like medical bills and charitable contributions would not need to itemize this year, as they would take the Standard Deduction instead.

We know that these changes present pros and cons to different people for different reasons. We’re bringing it to your attention because we hope that no matter your tax situation, you will continue to donate to the causes that you care about most, because one thing that is not changing is the needs nonprofits are addressing in your communities. Maybe you might even find it easier to make a charitable continuation if you find yourself with a little extra cash. And since you’re reading this on Emmaus’ site, there’s a good chance you care about people with developmental disabilities, and we hope that we can count on your support to help continue providing Emmaus clients the richest life possible.
 
* Investopedia.com
 
**CNBC, Feb 2018 https://www.cnbc.com/2018/02/16/10-tax-changes-you-need-to-know-for-2018.html
 
*** Tax Policy Center, Dec 2017

 

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