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What changed?
- The new law increases the child tax credit from $1,000 to $2,000.
- Eligibility factors for the credit have not changed. As in past years, a taxpayer can claim the credit if all of these apply:
• the child was younger than 17 at the end of the tax year
• the taxpayer claims the child as a dependent
• the child lives with the taxpayer for at least six months of the year
One of the changes brought about by Tax Reform legislation passed in December 2017 allows businesses to write off most depreciable business assets in the year they place them in service.
The 100% depreciation deduction generally applies to depreciable business assets with a recovery period of 20 years or less and certain other property. Machinery, equipment, computers, appliances and furniture generally qualify.
If you have been itemizing deductions on your 1040, you may be affected by changes from the Tax Cuts and Jobs Act. You should take a few minutes to use the IRS Withholding Calculator to make sure your employer is withholding the appropriate amount of tax from your paychecks for your financial situation.
A new provision of the Tax Cuts and Jobs Act (TCJA) creates a new tax credit for employers who pay wages for family and medical leave. The new credit, which takes effect in 2018, only lasts through 2019. However, there is a chance it could be extended by future legislation. Eligible employers can claim a credit equal to a percentage of wages paid to qualifying employees on leave under the Family and Medical Leave Act (FMLA).
The IRS has not yet fully described some of the provisions, but here are the highlights:
On Wednesday the IRS posted a NEW W-4 Form for 2018; the Employee's Withholding Allowance Certificate and Personal Allowances Worksheet . It is recommended that employees consider re-doing this form and worksheet each year as life situations may have changed and you may want to consider instructing your employer to change your withholding.
The IRS also has a new Online Calculator. If you are an employee, the Withholding Calculator helps you determine whether you need to give your employer a new Form W-4. You can use your results from the Calculator to help fill out the form and adjust your income tax withholding.
The IRS encourages everyone to use the Withholding Calculator to perform a quick “paycheck checkup.” This is even more important this year because of recent changes to the tax law for 2018.