March is upon us, winter won't release its icy grip, and we are well into the 2018 tax season. For those who have already filed their 2018 tax returns, there have been surprises - some pleasant and some not. For most, the biggest surprise has been the 1040 form itself. Here is a link to the 1040 form on our website: Tax Forms. Please take a moment to click on it and take a look.
Surprise! The changes to the form 1040 are, without a doubt, the biggest that I've seen in over 30 years. So far it looks like everything is there but they've cut and pasted things together in a different way and they have condensed a lot of the data into fewer lines on page 2. To get a breakdown of the data on page 2 of the 1040, you need to go to new schedules - Schedules 1 through 6.
We have discussed the new tax law several times since it was passed more than a year ago. At the risk of repeating myself there are a couple of items that I would like to point out. Here is a link to a summary of the new tax law on our website: What The New Tax Bill Means for You. Please take a moment to look. We all know about the increase in the standard deduction, but what I would like to point out is that the exemption has been eliminated. Unpleasant surprise #1. Another item that is causing consternation is the elimination of the miscellaneous deductions subject to the 2% limitation on Schedule A. Unpleasant surprise #2. This is particularly unpleasant for people who have large unreimbursed employee business expenses.
There is a very nice pleasant change on the State of Ohio return. The deduction for contributions to an Ohio 529 plan has been increased from $2,000 to $4,000. And to help eliminate some confusion, it needs to be pointed out that this deduction is on a per return basis, not a per child beneficiary basis. In other words, there can be multiple contributions to a single plan for a child by multiple contributors and each can receive the deduction on their Ohio return.
As always, please call if you have any questions and please feel free to share this with others.
Until next time, Cheers!