Welcome to Spring and the end of Tax season! We expect the weather changes according to the seasons but this year we have to prepare for some big changes in the filing of personal income taxes in 2018.
Traditionally, our taxable income was determined by our marital status, family size and whether we used the standard deduction or our itemized deductions. If our deductions (mortgage interest, state and local taxes and property taxes as well as our charitable donations and medication donations) totaled more than our standard deduction, then we were able to deduct them from out total income. Then the number of exemptions (our family-size) times the current inflation amount was also deducted to determine our taxable income. Then taxes were determined by the tax rate assigned to that taxable income.
The new Tax Reform deletes the exemptions and doubles the standard deduction. Because the standard deduction is double, the target needed to be able to itemize has been raised. Special limitations on the total of mortgage interest, income tax and property (must be less than 10,000) will prevent many taxpayers from being able to itemize. The interest on HELOCs has been limited also.
The IRS estimates that 93% of the filers next year will be using the standard deductions. For a couple over 65, the new standard deduction will be $26,600; for singles over 65 it will be $13,300. Large families will have the same deduction as child-less couples under 65, 24,000; head of household will be at $18,000 and singles will be at $12,000.
Several non-profits have shown some worry that without the incentive of donations being tax deductible, their benefactors may not support them at the level they are accustomed. I don’t believe the people who believe in the purpose of the non-profit will be dissuaded by the fact that they can no longer get the tax deduction.
Using the Law of Circulation, we create the abundance that supports both our Center and our Community. We support our Spiritual home that in turns supports us. We affirm that our Center will continue to grow despite these tax changes.
If you are interested in a high level discussion about the new Tax Reform and how it might affect your tax situation, stay after the service on April 22.
The New Tax Reform and You
April 22, 11:30 am to 12:15 pm
Presented by Sandy Rinehart