This article is a continuation in my series about the 2017 Tax Reform Act. Today, I am sharing information about changes to the child tax credit, capital gain tax, and the state and local tax deduction limitations and more.
The child tax credit is increased from $1,000 to $2,000 for qualifying children under the age of 17. This is good news and so is the increase in the income levels for the credit phase out. For married filing joint, the credit phase out is increased to $400,000 and $200,000 for all other filers. In addition, there is a new $500 nonrefundable credit that is provided for certain non-child dependents such as elderly parents.
Capital gains and qualified dividends, under the new law, generally retain the same maximum tax rates as well as the income breakpoints. For 2018, the 15% breakpoint is $77,200 for joint returns and surviving spouses, $51,700 for heads of households and $38,600 for other unmarried individuals.
Not a lot has changed in this capital gains tax structure; however, one thing to note is that your short-term capital gain tax rates are still taxed at ordinary tax rates which have changed under the new law. Generally speaking, the new lower marginal tax rates and adjusted income thresholds could produce a potential tax savings on short-term capital gains for many taxpayers.
Under the previous law, taxpayers could deduct their real estate tax and state and local income tax or sales tax from their taxable income. Under the new law, taxpayers may claim an itemized deduction of up to $10,000 for the combination of nonbusiness state and local property tax, state and local income tax or sales tax. Foreign real property taxes are not deductible.
Visit my website at actservices-inc.com for more information on the new Tax Cuts and Jobs Act, or watch my video series on Elite Experts Network.
