You may have assumed the tax law that took effect last year was a boon to people with ultra-high earnings. Yet many of them received only a small reduction in their tax rate — and some will be paying more under the new law.
Beginning in 2018, you won’t be claiming a deduction for personal exemptions on your federal income tax return. Yet personal exemptions still exist. They can make a difference on both state and federal income tax returns. Oddly enough, even though the amount you can deduct has been reduced to zero, for some taxpayers it’s still important to know the dollar amount of the personal exemption deduction under prior law.
If you prepare your own tax returns, be sure to find out whether you can use one of the free offerings from leading software providers. Because of changes in the tax law, millions more taxpayers will qualify for these free offerings than in the past. Here’s our practical guidance on the best alternatives:
As a general rule, we’re required to pay our federal income tax over the course of the year through withholding, estimated tax payments, or a combination of the two. Unless an exception applies, you pay a penalty if these payments total less than 90% of your tax liability. The tax law that took effect in 2018 changed so many rules that we can expect a larger than usual number of taxpayers to fall short of 90% that year. The IRS says it will waive the penalty if you paid at least 85%. The waiver isn’t automatic, though: you have to file Form 2210.
Have you heard that the Tax Cuts and Jobs Act repealed the alternative minimum tax (AMT)? Probably not, because the AMT survived. Yet it’s been whittled down to a shadow of its former self. For nearly all taxpayers, AMT repeal is a practical reality.
Hoping to settle into a Tesla? Best move fast, if you want that tax credit. Because the company passed a threshold of 200,000 eligible vehicles sold, the tax subsidy for its cars will wind down as follows:
The full $7,500 tax credit will be available only until December 31, 2018.
For the first half of 2019, eligible vehicles will qualify for half that amount ($3,750).
For the second half of 2019, the figure is $1,825.
Teslas purchased after the end of 2019 will not qualify for the credit.