 Hello and welcome to this session. This is Professor Farhad. In this session we're going to be looking at a quick review for the major personal tax changes for 2018. So bear in mind this is not comprehensive, 100% comprehensive. I cannot go over every single rule. I'm going to do my best and this is going to be a quick review and this is for educational purposes. Now any change you would like to learn more about you can go to my website and click on income tax scores, tax cuts and jobs of 2017 and I have 80 lectures plus covering those rules but this is just a quick review. Okay and I always remind my viewers that's you to connect with me on a professional as well as a personal level. I really like to know my viewers and you can connect with me on LinkedIn if you have a LinkedIn account. If you don't have a LinkedIn account please make sure you make sure you do have a LinkedIn account that's very important for your professional image as well as networking purposes. If you have a Facebook account you can like my Facebook page and you can connect with me on my personal Facebook if you if you chose to. You want to make sure you subscribe to my YouTube so you're always up to date about any additional lectures. If you like my lectures please like them, share them, put them in playlists, email your friends, let your classmates know about them. This is my Twitter account and on my website you can find my lectures. Let's go ahead and start by comparing just for just for the purpose of comparison I'm going to use the single tax rate first. So this is your tax brackets for 2017 and this is for 2018. Let's just take a look at the difference. The 10% not much of a difference but notice the 15% now it started at 93 9,326. Now it's 12% so notice there's a 3% difference so now if you make between 90 if your taxable income between 95,26 and 38,700 you only pay 15% on this on this amount. Again notice the you we go from 25 to 22 for the 2018 again there is a lower tax bracket but notice it ends a little bit earlier it used to end at 91 nevertheless it's lower tax bracket also 28 is 24 so overall it's a lower tax bracket okay there's a shifting of income that's basically what's going on here there's a shifting of income your income is being taxed at a lower level and which is good which is good overall it's good again merit filing merit filing jointly 15% down to 12 and notice here up to 19,000 now notice up to 19,000 you'll get the 10% used to be only up to 9,325 okay same thing for for the 15% it went from 15 to 12 and the increase that to 77,000 used to be 15% up to 37,000 again I would say this is this is good news but again you cannot make a comprehensive statement and until you look at the taxpayers overall overall return but overall the tax rate this is the major change the tax rate and the tax bracket are big improvement compared to prior years okay we're going to look at the standard deduction and the standard deduction good news about the standard deduction and this is the standard deduction basically the standard deduction is an amount given to you by the government it's a standard every everyone gets it so if you don't itemize you could use the standard deduction and for example just to give you an illustration if you are merit filing jointly the standard deduction of last year was 12,700 if you were single it was 6,350 so here's the new standard deduction they double they almost double the the standard deduction so there's a difference of 5,650 if you're single and the difference for merit filing jointly is 11,300 ahead of a household they increase the standard deduction by 8,650 so this is definitely good news because why because they increase your standard deduction which in turn reduces your taxable income now you we also used to have something called personal exemption and basically the personal exemption is taken away how does the personal exemption work for each dependent for yourself as well as each dependent and your spouse that's claimed on the return you will get a deduction of 4,050 what happened to this it's gone basically the personal exemption is gone so what they did they took the personal exemption and they increase your standard deduction okay again we cannot make a definite statement if this is good or bad but overall if they took a deduction i'm gonna call it you know it's bad news if they increase the deduction it's good news but how it works all how it all fits all together you don't know until you finish someone's return and each individual is different okay let's take a look at the child tax credit and this is also designed to offset the the takeaway of the personal exemption the old rules the credit was up to a thousand dollar now the credit up to two thousand so they did double your child tax credit refundable credit was up to a thousand now the refundable credit is up to 1400 and that's capped at 15 percent of earned income and access of 4500 so if your income is greater than 13,855 you are capped how does it work basically what that means is if you earn more than 4500 if you earn more than 4500 up to 13,833 let me just show you where these numbers are coming from minus 4500 so this is the amount in access let me just do this computation real quick minus 4500 let me say 13,833 minus 4500 that's 9,333 so that's that's the amount above 4500 times 15 percent to multiply this by 15 percent it should give us approximately 1400 therefore if you make more than 13,833 you're basically you are capped at you are capped the refundable credit is capped more good news they increase the phase out so before at 200,000 you would you would lose the child tax credit now it's at 240 merit filing jointly went from 400 to 440 head of a household 200 to 240 so this is this is definitely good news again they increase the credit and they increase the phase out so more people would qualify and they would they will not be phased out the next topic we're gonna look at is taxes you paid and this is what we are talking here about income taxes general sales tax real estate personal property tax and other taxes the old rules is all these taxes were deduction deductible on your schedule A if you if you itemize your deduction there were big deduction for some and they were all deductible okay the new rules you are limited to 10000 for merit filing jointly in 5000 if you are if you are filing as a single okay who's who's gonna affect the most it's gonna affect New York California New Jersey where the property taxes this number here property taxes here this is high and those states now well it's interesting you know if you know anything about those states you know that they are democrat is this to penalize them I don't know who knows okay interest you paid interest you paid is what are the old rules the old rules home acquisition that before 2018 interest on up to 1 million dollar is deductible so if you have if you bought a home and your mortgage is up to a million dollar it's deductible now the home acquisition that if you have did that before 2018 nothing have changed you still have that interest deduction on your loan as long as your loan was up to a million dollar here we go home acquisition after 2018 interest on only 750,000 dollar of that is deductible all what they did is they reduced the million down to 750 so if you're paying interest on this million you are able to deduct the whole thing now if you bought the home after 2018 you can only take the 750 times that percentage interest on home equity loan line of credit up to 100,000 of that is deductible so if you have a home equity loan like a second mortgage to take a vacation buy a home do remodel your home home equity loan 100,000 up to 100,000 it was deductible that is gone and I'm telling you a personal experience I used to have a home line of credit I did pay it off because it's no longer deductible miscellaneous itemized deduction subject to 2% adjusted gross income assuming you itemize my students would love this all these deductions are no longer deductible from 2018 into 2025 so all these miscellaneous subject to 2% deduction and there's a lot of them okay now some of them for example old section 212 expenses expect except expenses for producing rental and property income they're gone now if you don't know what rental and property income is just go to my chapter six in my lectures and you can you know look at rental and royalty income same thing if you don't know what hobby losses are a hobby expenses up to hobby income see chapter six home office deductions are gone all these topics one way or another they are covered in my course but don't know no longer deductible from 2018 to 2025 there are other miscellaneous itemized deduction not subject to 2% adjusted gross income those remain deductible for AGI impairment work related expense of individual with this with disability amortizable premium on taxable bond losses from Ponzi type investment scheme gambling losses to the extent of winning unrecovered investment in an annuity those are still deductible those are not subject to 2% limitation 401k contribution they did not change the rules they increased the limit I believe by a thousand dollars so you can contribute a thousand dollar personal casualty and theft losses again students like this would like this because they are suspended from 2018 to 2025 although they are suspended in my class I'm gonna still teach personal casualty and theft losses because they are still they do still apply in federal disaster area and they could be on your CPA exam although they are suspended for practical purposes but you could see them on the CPA exam charitable contribution uh charitable contribution was part of itemized deduction itself part of itemized deduction for the cash contribution you were limited to 50% of adjusted gross income now what they did they increased it because because they feared that less people will itemize therefore less people will contribute money so what they said if you contribute cash you can deduct up to 60% of your adjusted gross income moving expenses there were various rules job change mileage time limit so on and so forth and it used to give a lot of headache to the students what's deducted and what's not those rules are suspended unless you are part of the armed forces education credit the american opportunity credit 2500 of which 1000 is refundable first year of college that's still the same lifetime learning credit up to up to two thousand dollar no minimum number of credits that's still the same non taxable scholarship and grant that's still the same more about educational issues tuition and fees deduction four thousand dollar they've they increased the phase out which is good it means more people would qualify for this deduction for agi student loan interest 2500 that's still the same 529 plan amount that grow tax free of use for education they expended this to include k-12 elementary and secondary school tuition for public private and religious school so they expanded this you could use that money for more options alimony there was a change in alimony now now bear in mind this alimony change only applies to alimony post post i believe 12 15 2017 so starting any alimony that that took place after december 15 2017 simply put when you start 2018 applies to 2018 alimony used to be deductible and taxable any alimony agreement entered into after the state it's no longer deductible it's no longer taxable it's no longer deductible it's no longer taxable any alimony prior that was that was an effect it does not change now earn income credit there's no change to earn income credit again here there's politics i mean if president trump wanted to hurt the democrat he would have you know maybe that's something about the earned income credit just want to you know that i don't want to say that president trump took away the property taxes on purpose because this would have hurt the democrat more if he took the earned income credit so again um is there any politics going on we really don't know um federal state taxes single used to be the exemption five million uh four hundred and ninety thousand the koreans the exemption to uh i'm sorry for the single they doubled it and for the mary filing jointly they doubled the exemption who's this going to benefit obviously it's going to benefit the rich it means now you don't have to pay taxes on your federal estate until it's more than 22 million used to be 11 million so the exempt amount much higher they doubled it obviously this benefits the rich because if you have more than 11 million then i would say you are rich okay by my standards at least net operating losses they used to be carried them two years back if you have any losses and 20 years forward now you can carry them only forward alternative minimum tax alternative minimum tax they would they did increase the limit they did increase the limit now this is a quick and dirty overview about how those changes if you want to learn about those changes in much much much more in details well the the answer is to go to my website which is or to my youtube and on my website i have the link to my youtube and you can view i have as of today around 80 lectures now obviously once i'm done with my corporate income tax course i will have a quick and dirty review about changes in corporate income tax if you happen to visit my website please consider donating the donation button is right next to it study hard good luck and see you on