Do you know how the 2018 tax changes affected you?
Much has been written about the Tax Cuts and Jobs Act that went into effect for the 2018 tax year. And a lot of what was written was done so with a political agenda in mind. Not so here.
What’s the fuss all about? Here are a few of the changes that lead to questions/hysteria:
- Personal exemptions – gone.
- Tax rate changes for most brackets – yes.
- State and local tax payments capped – yes, at $10,000.
- Child tax credit – doubled to $2,000.
- Changes to who is affected by the Alternative Minimum Tax – yes.
In my opinion, the easiest way to see how the changes affected you is to look at your effective tax rate. This rate will take into account fluctuations in your income and deductions from year to year, as well as the changes made to the tax code from one year to the next.
I put together a handy worksheet that will help you understand how you were impacted by the change in tax rules. It’s just five rows and five columns—a fairly simple exercise.
This will help you figure out your effective tax rate.
This is the rate that informs you what impact the tax law change had on you.
No email signup needed for this one! Hopefully, this clears up how tax reform affected you.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.