PNF CPA & Tax Firm Advise Taxpayers to Stay Abreast of New Tax Laws This Tax Filing Season

It’s time to sharpen your pencils and work on that 2018 income tax return. Just make sure you understand the new tax law first. After one year under the Tax Cuts and Jobs Act, the overhaul of the federal tax code, confusion about the law continues.

Half of people polled by the personal finance website said they don’t understand how the tax overhaul affects their bracket.

PNF CPA & Tax Preparation Accounting Firm reminds taxpayers that various state and federal tax changes are in effect for the 2018 tax year for both individuals and businesses. PNF CPA can provide guidance on both federal and state law changes.

The following are some notable changes:

New Jersey

• Gross income tax increase. The gross income tax rate has been increased from 8.97 percent to 10.75 percent for those taxpayers whose income is over $5 million.
• Earned Income Tax Credit (EITC). Qualified taxpayers are eligible for a New Jersey EITC equal to 37 percent of their federal earned income credit.
• Property tax deduction. The New Jersey property tax deduction for principal residences has increased from a maximum of $10,000 to $15,000 for 2018.
• Child and dependent care credit. A new tax credit is available for eligible resident taxpayers who are allowed a federal credit for expenses they incur for the care of one or more qualifying individuals.
• Corporation business tax (CBT) changes. A number of changes have been made to the CBT, including a 2.5 percent surtax for many business taxpayers with allocated net income exceeding $1 million.Learn more about New Jersey tax rules on the New Jersey Division of Taxation website.

Federal

• Tax brackets. Most individual tax income tax brackets have been lowered, including the top marginal rate from 39.6 percent to 37 percent.
• Standard deduction and exemptions. The standard deduction has been almost doubled, and the personal exemption has been eliminated.
• Itemized deductions. A number of deductions have been eliminated or limited, most noteworthy being the $10,000 cap on all state and local taxes.
• Alternative Minimum Tax (AMT). The exemptions and phaseouts have been increased so that the AMT will be less likely to hit at lower income levels.
• Corporate tax changes. The corporate tax rate was reduced from a maximum progressive rate of 38 percent to a flat rate of 21 percent. Business taxpayers other than corporations may be entitled to a deduction equal to 20 percent of qualified business income.
  Learn more about federal income tax changes on the IRS website.

For more information or to schedule your business or personal tax preparation and planning contact PNF CPA

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