2018 Tax Changes

As I am sure you have heard, the new tax bill has passed both the house and senate and has been signed into law by the president. The new tax bill is removing any and all deductions for employee-related business expenses. Union Dues, Per Diem, uniforms, internet, cell phone usage…all these deductions are gone!

Your tax life as a Flight Attendant will be forever changed. They are removing any and all deductions for employee-related business expenses. Union Dues, Per Diem, Uniforms, internet, cell phone usage…all these deductions are gone!

This tax year 2017, for taxes due April of 2018, will be the last year we can take any of these deductions. Starting in two weeks, on January 1 of 2018, we will operate under the new tax law.

Here is a glimpse of what we know so far that is changing:

  •  The standard deduction is essentially going to be doubled. Previously, it was $6,300 for a single filer that will now be about $12,000; married filers will go from $12,600 to $24,000. This is good considering they are taking away a majority of our deductions.
  • The personal exemption of $4,050 per person on the tax return is being eliminated. Even though your standard deduction is doubled—we are losing the personal exemption. If you are married with two children, you will lose a $16,200 deduction. They are giving us a $500 credit for each non-child dependent (a child over 17, parent, or qualifying dependent).
  • The tax rates are being lowered. We will see some relief in this area. The main difference, however, will be the reduction of the top tax bracket from 39.6% to 37%.
  • Taxes paid deduction…The deduction previously received for sales tax and state income tax paid will be combined with real estate taxes with a maximum deduction of $10,000. Interesting enough, if you are single, you have a 10K max, and if you are married, it is the same 10K maximum deduction.
  • Mortgage interest deduction will remain consistent for most of us. If you have a mortgage over $750,000, the interest on the greater amount will not be deductible. This amount is reduced from $1 million. If you already have a mortgage on your home over this amount, you are unaffected by this change. However, they are taking away the deduction of interest for all home equity loans. We have always enjoyed this deduction in the past, but it will be gone!
  • Alternative minimum tax will see some big changes; however, the main reason you hit AMT—state taxes you paid and flying deductions—those two factors are gone or limited, so it will be less likely you will be in AMT. But the new bill does raise the income exemption level to $70,300 for singles, up from $54,300 today; and to $109,400, up from $84,500, for married couples.
  • The Child Tax Credit will be increased from the current amount of $1,000 per child to $2000 per child. Keep in mind, only $1,400 of this credit is fully refundable—if you owe no tax, you will only get the smaller amount. The income ceiling has also been raised so more of you can qualify for this credit! Good News!
  • Moving Deduction Eliminated. In the past, if you changed bases and incurred a cost to move your family and household from one base to another, this expense was deductible. Now there will be no deduction for a business-related move. They did keep this deduction for military relocations. In addition, if the company pays for the move, this is taxable to you as income, this used to be tax-free.

I’m sure you have probably been reading about the major changes if you would like to see the actual law, here is the link to the Senate Bill, the House Bill and then the “Conference Agreement”. Keep in mind this could change before it is finalized, but the major points will become law when passed. The full ruling is here.

I welcome any questions you may have on deductions or how this will all affect your tax filing. Email me at BMorrow@flightax.com, or call the office at 317-984-5812.