Along with changes to the Standard and Itemized deductions, the Tax Cuts and Jobs Act of 2017 (TCJA) modified the child tax credit and credit for other dependents, moving expenses, AMT, and health care coverage.
The Tax Cuts and Jobs Act – Credits, Moving Expenses, and Health Care Coverage
Benefits for dependents expanded or changed
Child tax credit and additional child tax credit. For 2018, the maximum credit increased to $2,000 per qualifying child. Up to $1,400 of the credit can be refundable for each qualifying child as the additional child tax credit. In addition, the income threshold at which the child tax credit begins to phase out is increased to $200,000 ($400,000 if married filing jointly). This means that more families with children under 17 now qualify for a larger child tax credit.
Beginning with tax year 2018, a child must have a Social Security number issued by the Social Security Administration before the due date of the tax return (including extensions) to be claimed as a qualifying child for the child tax credit or additional child tax credit. Children with an ITIN can’t be claimed for either credit.
Credit for other dependents. A new credit of up to $500 is available for qualifying dependents other than children who can be claimed for the child tax credit. The qualifying dependent must be a U.S. citizen, U.S. national, or U.S. resident alien.
Deduction and Exclusion for Moving Expenses Suspended
The deduction for moving expenses is suspended. During the suspension, no deduction is allowed for use of an automobile as part of a move. Also, employers will include moving expense reimbursements as taxable income in the employees’ wages because the new law suspends the former exclusion from income for qualified moving expense reimbursements from an employer. These changes do not apply to members of the U.S. Armed Forces on active duty.
Alternative Minimum Tax (AMT) Exemption Changes
The AMT exemption amount is increased to $70,300 ($109,400 if married filing jointly or qualifying widow(er); $54,700 if married filing separately). The income level at which the AMT exemption begins to phase out has increased to $500,000 ($1 million if married filing jointly).
Reporting 2018 Health Care Coverage
Taxpayers must continue to report coverage, qualify for an exemption, or report an individual shared responsibility payment for tax year 2018. For tax year 2018, the IRS will not consider a return complete and accurate if a taxpayer does not report their Health Care Coverage information on the relevant forms.
The shared responsibility payment is reduced to zero under the Tax Cuts and Jobs Act for tax year 2019 and all subsequent years.
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Any tax advice herein is based on the facts provided to us and on our interpretation of tax legislation as it reads at the time the advice is provided. Tax law is subject to continual change, at times on a retroactive basis and may result in incremental taxes, interest or penalties. We are not responsible for updating our advice for changes in law or interpretation after the date the advice is provided. Every tax situation is different. We are not responsible for the tax implications to any individual or entity that may act on this advice.