INDIANAPOLIS (WISH) — The tax law means changes not only for you but for your entire family. Whether or not you will see lower taxes will depend on your family’s situation.
When President Donald Trump came to Indianapolis, he said who his tax plan will benefit.
“For those that love your family, it matters a lot,” he said, as the crowd laughed.
Let’s take a family of four. Here’s how it will work up until next year’s filings. The standard deduction was $12,000. You take off another $4,000 per person, as part of personal exemptions. That means it was taken off your taxable income.
Starting for your 2018 taxes — filed in 2019 — the standard deduction doubles to $24,000 but the personal exemption is gone. That’s a $4,000 difference.
“The question will be will the lower tax rates combined with some of the other provisions in the tax code be enough for them to recoup the $4,000 in lost deductions,” asked Chad Halstead, a partner at Katz, Sapper & Miller, a CPA and tax firm in Indianapolis.
But Halstead said there’s another major change: the child tax credit. It is now $2,000 instead of $1,000 per child.
That money comes directly off what you owe in income tax. A lot more families will be eligible because the threshold for a married couple has been $110,000 in income.
Now it will be $400,000.
“If you’re preparing taxes yourself, there’s a special line item for the tax return for the child tax credit. Make sure you’re taking advantage of that,” said Halstead.
If you have the child tax credit but do not have tax liability, meaning you don’t owe anything in income tax, you will get a refund from the government up of to $1,400 per child.
We’re examining the new tax law every Monday this month. Got a question for Eric?