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Individual tax returns see big changes with Tax Cuts and Jobs Act

by Wyoming Livestock Roundup

Worland – The passage of the Tax Cuts and Jobs Act on Dec. 22, 2017 brought optimism with it, and while farm and ranch business filings with the Internal Revenue Service will bring relief in several forms, Enrolled Agent Wendy Tejada and Certified Public Accountant Gary Wantulok with SBW & Associates in Worland noted that individual tax returns will also see changes. 

“As farmers and ranchers, we’re also individuals, so the Tax Cuts and Jobs Act has individual impacts, as well,” Tejada says.

Tax brackets

Wantulok explains one of the biggest changes that Americans will see in their individual income tax return is in tax brackets. 

“The 2017 and prior tax brackets were 10, 15, 25, 28, 33, 35 and 39.5 percent,” he says. “Those have changed. We still have seven brackets, but a lot of people will see decreased taxes.” 

The new brackets now tax individuals at rates of 10, 12, 22, 24, 32, 35 and 37 percent. 

“It’s worth the time to look and see what the changes to the tax brackets are to compare them with our individual incomes,” Wantulok says. “Many Americans will see decreases in their tax rate and will see a little bit of savings.” 

Standard deduction

Another substantial changes comes in the size of the standard deduction, which was nearly doubled across all classes. 

“The standard deduction for single people jumped from $6,350 to $12,000, and the rate for married filing jointly increased from $12,700 to $24,000,” Tejada said. “Now, with the higher standard deduction, not as many people will itemize on their personal tax returns.” 

At the same time, however, the personal exemption was eliminated. 

“This is another big change that will particularly affect large families,” she mentions. “Right now, on our tax returns, for every person claimed, we get a deduction of $4,050 per person. That is now gone.” 

The result is no benefit for claiming college students or children on tax returns.

“This is one of the big scares for families,” adds Wantulok. “However, there was a change made that helped out those families. In 2017, the Child Tax Credit was $1,000. Congress doubled that to $2,000 per qualifying child, which helps to offset the personal exemption for large families.”

Additionally, the Child Tax Credit in 2017 began to phase out at $110,000 incomes. For 2018, that rate is increased to $400,000, which makes a big difference for joint filers and families that make more money.

Tejada uses the example of two teachers who probably don’t earn the Child Tax Credit, but under 2018’s new laws, they will be eligible for a $2,000 credit for each child.

“This is one area where we’re going to see a lot of impact,” Tedaja adds.

Another interesting component is the $500 non-refundable credit for qualifying dependents other than children in the home.

“For example, if a parent, niece or nephew is a dependent living in our home, we can take a $500 non-refundable credit to wipe out some of our tax liability,” she says. 

Education and healthcare

Other areas of concern for many Americans came in education and healthcare impacts on taxes. 

“Another scare happened when the Senate bill seemed to decrease education tax breaks, but they changed that,” Wantulok explained. “The final version of the bill does not eliminate education tax break, and Lifetime Learning Credits and Student Loan Interest Deductions remain in place.”

On the healthcare side, penalties for Obamacare were eliminated, beginning in 2019 so people without healthcare will still see the potential for a penalty in 2018. 

“However, they used to have silent filing, where, if someone didn’t have health insurance, they didn’t have to acknowledge it. Rather, they could just leave the box blank and not answer that question,” Tejada says. “Now, silent returns are not allowed, and we have to acknowledge health insurance status.”

The results is some people who were not paying the penalty as a result of silent filing will now be forced to pay a penalty of $395 per person or two percent of adjusted gross income, up to a maximum of $2,050 per person.

Other changes

Changes to mortgage interest, charitable contributions and medical expenses were also retained, with some changes. 

“People who itemize mortgage interest and charitable contributions as their biggest deductions will still see those available,” Tejada says, noting changes have been made. 

“Right now, mortgage interest can be taken on homes up to $1 million. That will be decreased to $750,000,” she explains. “Home equity loan interest cannot be deducted beginning in 2018.” 

However, an increased limit was seen for deductions resulting from charitable contributions. In 2018, deductions up to 60 percent of income can be taken, as compared to the 50 percent cap seen in 2018.” 

Additionally, medical expense deductions have been changed. 

Currently, medical expenses can only be deducted if they rise to the level of 10 percent adjusted gross income. With the 2018 bill, that number has been dropped to 7.5 percent. 

“We still have to reach 7.5 percent of our income in medical expenses to qualify for that deduction, but it’s still a bit lower than the 10 percent floor we had,” Tejada says

Tejada explains, “The Joint Committee on Taxation ran a survey and found that in 2018, 94 percent of households will claim the standard deduction, compared to 70 percent of people who claim the standard deduction today. When Congress said they were making the tax code easier, I think this is what they meant. The fact most people won’t itemize simplifies things.” 

Tejada and Wantulok explained changes as a result of the Tax Cuts and Jobs Act during WESTI Ag Days, held in Worland in mid-February. 

Saige Albert is managing editor of the Wyoming Livestock Roundup and can be reached at


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