2018 IRS Provision Updates

The IRS announced last week the annual cost of living adjustments for various tax-related provisions for 2018. Keep in mind, these new numbers are for tax year 2018 (beginning January 1, 2018 thru December 31, 2018), which the return will be filed in 2019. Additionally, these are the amounts as the law stands today. If President Trump’s tax reform plan is passed, the amounts below may be affected. Refer to the table below for some of the key area updates:

 

Tax Provision 2018 Amounts 2017 Amounts
Standard deduction

  • Married filing jointly
  • Single taxpayers and married filing separately
  • Head of households
 

$13,000
$6,500
$9,550

 

$12,700
$6,350
$9,350

Personal exemption (subject to phase-out that begins with AGI of $26,700 – single, $320,000 – married filing jointly (MFJ) and is completely phased out at $389,000 – single, $442,500 – MFJ)  

$4,150

 

$4,050

Tax rates – highest bracket of 39.6% for individuals whose income is greater than the following:

  • MFJ
  • Single
 

$480,050
$418,400

 

$470,700
$426,700

Limitations on itemized deductions to be claimed for individuals whose income is greater than the following:

  • MFJ
  • Single
 

 

$320,000
$266,700

 

 

$313,800
$261,500

Estates tax basic exclusion amount $5,600,000 $5,490,000
Annual exclusion for gifts $15,000 $14,000
Foreign earned income inclusion $104,100 $102,100
Regular 401(k) contribution limit $18,500 $18,000
Annual compensation limit for retirement contribution $275,000 $270,000

 

 

If you have any additional questions, please contact Mike Dempsey, CPA at 314.576.1350 or mdempsey@bwtpcpa.com.

Mike Dempsey, CPA is a Senior Accountant with BWTP P.C. Read more about Mike here.

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