- March 6, 2019
- Posted by: oneplacefinancial
- Category: Tips
2017 saw some policy changes brought about by the Trump government. At the end of 2017, new tax brackets were introduced. These tax brackets change the amount of tax refunds one would receive.
The Tax Cuts and Jobs Act cut individual income tax rates and doubled the deduction; personal exemptions, on the other hand, were eliminated.
The highest tax bracket dropped to a rate of 35%. The corporate tax rate also fell from 35% to 21%. The corporate tax rate cuts are said to be permanent, while the individual tax rates expire in 2025.
Individual income tax rate
The act introduced at the end of 2017 lowered tax rates for individuals while keeping the 7 income brackets.
The highest tax bracket for single people was set at $500,000 a year, while it was set at $600,000 for married couples. The overall reduction in tax rates has been of 2.6% since 2017.
Married couples or those filing tax returns jointly can now have deductions of up to $24,000, which is $11,000 more than the previous law.
Single people or couples who file separately can avail $12,000 in standard deduction in comparison to the $6,500 previously.
The head of a household can now get up to $18,000, up from $9,550.
Child tax credit
Tax credit is one of the benefits of the tax system. Your taxable amount is reduced if you meet the requirements. The child tax credit is a policy whereby parents can have their taxable amount reduced. This is to facilitate a healthy and happy upbringing of the child.
The child tax credit has been doubled to $2,000 per child for the new tax year. $500 is available to those who are still dependents.
Income tax process
The IRS has set up its free tax filing portal that lists companies where individuals can file their federal returns for free. Those earning under $66,000 can use this service.
As soon as you receive your W-2 form from your employer, you are free to file your taxes. With the help of the W-2, calculating your tax returns is simple. Those filing their taxes online need to answer some questions regarding marital status, age, dependents, health insurance and your contact details.
The second section deals with your income; this is where your W-2 comes in play. You need to calculate your 2018’s annual income, withholding taxes, and income tax.
The next section of the form is about your assets, children and whether or not you have claimed any deductions or credits.
Another easy way to deal with taxes is to have a professional file them for you. The process is quick and they can take care of all the deadlines involved in the process. You can also get some great tax saving tips out of them too!