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Individuals

Tax Reform Provisions that Affect Individuals

As the IRS implements this major tax legislation, check this page for updates and resources to learn how the Tax Cuts and Jobs Act (TCJA) affects individual taxpayers.

Withholding

The IRS encourages several key groups of taxpayers to perform a “paycheck checkup” to check if they are having their employer withhold the right amount of tax for their situation, following recent tax-law changes. It’s especially important for certain people, to check their withholding. They are people who:

  • Belong to a two-income family.
  • Work two or more jobs or only work for part of the year.
  • Have children and claim credits such as the Child Tax Credit.
  • Have older dependents, including children age 17 or older.
  • Itemized deductions on their 2017 tax returns.
  • Earn high incomes and have more complex tax returns.
  • Received large tax refunds or had large tax bills for 2017.

Resources: Tax Withholding, Withholding Calculator Frequently Asked Questions, Tax Reform Tax Tip 2018-45, Tax Reform Tax Tip 2018-46, Tax Reform Tax Tip 2018-47, IR-2018-36, IR-2018-179, Estimated Taxes for Individuals FAQs, IR-2018-180, Tax Reform Tax Tip 2018-154

A new version of Form W-4 is available to help taxpayers check their 2018 tax withholding following passage of the TCJA.

If changes to withholding should be made, the Withholding Calculator gives employees the information they need to fill out a new Form W-4, Employee’s Withholding Allowance Certificate. Employees will submit the completed W-4 to their employer.

Resources: IRS Statement on Form W-4

New withholding tables reflect changes in tax rates and tax brackets, the increased standard deduction and the repeal of personal exemptions, among other things.

The new withholding tables are designed to work with the Forms W-4 that workers have already filed with their employers to claim withholding allowances. This will minimize burden on taxpayers and employers. Employees do not have to do anything at this time.

Credits

For 2018, the maximum credit has increased and the income threshold at which the credit begins to phase out has increased.

Each child must have a Social Security number before the due date of your 2018 return (including extensions) to be claimed as a qualifying child for the child tax credit or additional child tax credit.

Resources: IR-2018-137

A new credit of up to $500 may be available for each dependent who does not qualify for the child tax credit.

Resources: Notice 2018-70

Deductions

Personal exemption deductions for yourself, your spouse, or your dependents have been eliminated beginning after December 31, 2017, and before January 1, 2026.

Resources: Notice 2018-84

For 2018, the standard deduction amount has nearly doubled for all filers.

Deduction for personal casualty and theft losses suspended (unless incurred in federally-declared disaster area)

Limitations to the deduction for state and local taxes

Limitations to the deduction for home mortgage interest in certain cases

Eliminating most miscellaneous itemized deductions such as:

  • Deductions for employee business expenses
  • Tax preparation fees
  • Investment expenses, including investment management fees
  • Employment related educational expenses
  • Job search expenses
  • Hobby losses
  • Safe deposit box fees
  • Investment expenses from pass-through entities

Eliminated the limitation on itemized deductions for certain high-income taxpayers. 

Resources: IR-2017-210, IR-2018-32, IR-2018-122, IR-2018-127Notice 2018-63

The deductibility of state and local tax payments for federal income tax purposes is now limited to $10,000 a calendar year.

A taxpayer who makes payments or transfers property to an entity eligible to receive tax deductible contributions must reduce their charitable deduction by the amount of any state or local tax credit the taxpayer receives or expects to receive. 

Resources: IR-2017-210, IR-2018-122IR-2018-172, REG-112176-18, IR-2018-178, SALT FAQNotice 2018-54

The deduction for moving expenses has been suspended for most taxpayers for tax years beginning after Dec. 31, 2017 through Jan. 1, 2026. This suspension does not apply to members of the Armed Forces of the United States on active duty who move pursuant to a military order related to a permanent change of station.

Resources: IR-2018-127

Some laws regarding depreciation deductions have changed. A taxpayer may elect to expense the cost of any section 179 property and deduct it in the year the property is placed in service. The new law increased the maximum deduction from $500,000 to $1 million. It also increased the phase-out threshold from $2 million to $2.5 million.

Resources: FS-2018-9

Tax Treatment of alimony and separate maintenance payments.

Resources: Notice 2018-37 

U.S. Armed Forces members

U.S. Armed Forces members who served in the Sinai Peninsula of Egypt may qualify for combat zone tax benefits retroactive to June 2015.

Resources: IR-2018-95

Members of the Armed Forces on active duty are still able to deduct their moving expenses. From 2018 through 2025, most taxpayers can no longer deduct your moving expenses unless they are a member of the Armed Forces on active duty.

Resources: IR-2018-127

Savings Plans

The Tax Cuts and Jobs Act made several changes to retirement plans.

Resources: Publication 590-B , IRA FAQS , IR-2018-19 , Retirement Plans FAQs regarding Loans , Notice 2018-74

Tax law changes enable eligible people with Achieving a Better Life Experience (ABLE) accounts to put more money into their ABLE account and possibly qualify for the Saver's Credit

Resources: IR-2018-139 , Notice 2018-62 , Tax Reform Tax Tip 2018-136

A change in the inflation adjustment calculations for 2018 reduced the maximum deductible HSA contribution for taxpayers with family coverage under an HDHP by $50, to $6,850.

Resources: Rev. Proc. 2018-27, IR-2018-107

Taxpayers, beneficiaries, and administrators of 529 and Achieving a Better Life Experience (ABLE) programs can rely on the rules described in Notice 2018-58  until the Treasury Department and IRS issue regulations clarifying these changes.

Resources: IR-2018-156, Notice 2018-58,  Publication 970

Other Information

The TCJA made several changes to the way income from foreign holdings are taxed. See International Taxpayers and Businesses for more information.

The tax year 2018 annual inflation adjustments have been updated to reflect changes from the TCJA.

Resources: IR-2018-94Rev. Rul. 2018-11, Rev. Proc. 2018-18 

Opportunity Zones are an economic development tool—that is, they are designed to spur economic development and job creation in distressed communities. Opportunity Zones are designed to spur economic development by providing tax benefits to investors.

Resources: Opportunity Zones Frequently Asked QuestionsNotice 2018-48, Rev. Proc. 2018-16

Individuals and businesses have additional time to file an administrative claim or to bring a civil action for wrongful levy or seizure. The TCJA extended the time limit for filing an administrative claim and for bringing a suit for wrongful levy from nine months to two years.

Resources: IR-2018-126, Filing a Wrongful Levy Claim, IRS Tax Reform Tax Tip 2018-123