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I would like your expert opinion regarding the new 2018

I would like your...

I would like your expert opinion regarding the new 2018 federal income tax laws.

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If I understand correctly, the tax laws in 2018 have changed. My specific situation is that I file as head of household since I claim a non child family member. Now that exemptions are no longer deductible, is there any other means of receiving a tax break as a non child care provider?

Accountant's Assistant: Is there anything else the Accountant should be aware of?

I always file schedule a form along with my 1040 since I realize a greater deduction.

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Answered in 1 minute by:
3/17/2018
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,007
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Hi. My name’s Lane.

...

I hold a law degree, with concentration in Tax Law, Estate law & Corporate law, an MBA in finance, a BBA, and CFP & CRPS (Chartered Retirement Plans Specialist) designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, since 1986.

Bear with me just a moment.

I'm reviewing your question now and typing up my reply.

...

I'll post that in just a few moments. Then, let me know if you have further questions on this.

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Customer reply replied 1 month ago
Ok, thank you.

Although the dependency exemption itself is gone the child tax credit has been expanded.

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Under tax reform, the Child Tax Credit may be worth as much as $2,000 per qualifying child depending upon your income - that's twice as much as before. A qualifying child for this credit must meet all of the following criteria:

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  • The child must be under age 17 – age 16 or younger – at the end of the tax year
  • .The child must either be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister or a descendant of any of these individuals, which includes your grandchild, niece or nephew. An adopted child is always considered your own child.
  • The child must not have provided more than half of their own support.
  • You must claim the child as a dependent on your federal tax return. (exemptions not there but you still claim as a dependent)
  • The child must be a U.S. citizen, U.S. national, or U.S. resident alien and you must provide a valid Social Security number (SSN) for the child by the tax return due date.
  • The child must have lived with you for more than half of the tax year (some exceptions apply).

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In prior years, the Child Tax Credit was nonrefundable which means that if the available tax credit exceeded your tax liability, your tax bill was simply reduced to zero. So even if you were able to claim the entire $1,000 per child (the maximum available credit for the 2016 tax year), if you didn't have any tax liability, you couldn't benefit from the credit. The credit would not carry forward to any future years, or back to any past years: it simply disappeared.

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Under tax reform, part of the Child Tax Credit remains nonrefundable but the "old" Additional Child Tax Credit, which was refundable, has essentially been merged into the new credit. I know that sounds confusing but what it means is that the Child Tax Credit is just one credit worth up to $2,000 per child and includes a refundable piece of up to $1,400 per child. To be clear, the $1,400 refundable piece is included as part of the $2,000 Child Tax Credit and is not an additional credit (unlike before).

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A refundable credit means that you can take advantage of the credit even if you do not owe any tax. Unlike with a nonrefundable credit, if you don't have any tax liability, the "extra" credit is not lost but is instead refunded to you.

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See this:

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Customer reply replied 1 month ago
Hi Lane, I understand. However, my question was specifically regarding a non child dependent. Are there other means of receiving a tax break for hose providing care to a non child dependent now that the exemption is gone?

When you say non-child do you mean disabled?

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OH you mean qualifying relative or other dependent....

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Customer reply replied 1 month ago
Unfortunately not. I am providing care for a nephew who is 20 and not working.

Ahhh, I'm afraid the only relief THERE is the fact that the H of H standard deduction will now be 18,000 ... let me see if can see anything else

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Customer reply replied 1 month ago
Unfortunately, the standard deduction is much less than I can deduct with schedule a form. So no benefit from change in standard deduction amount.

And of course the marginal brackets are all lower - across the board -

...

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Customer reply replied 1 month ago
but does not off set the loss from the exemption.

yep ... ... If you itemize and [IF YOU HAVE SUFFICIENT] medical deductions, (back to 7.5% agi floor) you can still use his medical costs if you pay

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Customer reply replied 1 month ago
Ok, the medical cost are not significant at the moment. Doesn't have a benefit.

But I see no new provisions that offset this situation ... there were several article written as this was being debated about how some H of H filers would not be winners here.

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Customer reply replied 1 month ago
I understand. This actually has a much broader impact. As you can imagine, that this can/will affect anyone caring for an elderly family member as well.

That's right. the whole category of qualifying relative ( as opposed to qualifying child) has been affected ... one of the many tradeoffs, so sorry

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Customer reply replied 1 month ago
Seems they are preparing for the storm to come.

Not sure I understand that one

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Customer reply replied 1 month ago
There are a large number of elderly that have retired without sufficient funds to provide for their needs. I can imagine that they will rely heavily on their families for assistance as dependent. These families will not be able to get the tax breaks for providing care.

Overall the tax reform has ALREADY had positive effects. The lower corporate rate and 20% pass-through deduction has already incentivized companies who put people OR assets to work.

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Now that the withholding tables are out, people will start to see more in their paycheck

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Companies are bringing money and jobs back to US soil.

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Starting in the 2018 tax year, employers will receive a tax credit that varies between 12.5 percent and 25 percent of wages they pay an employee who qualifies for and uses the Family and Medical Leave Act.

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This will take some time, but although the short term and the obvious is that some individual issues have been traded for others, the overall effect has already been to spur growth that ends up helping everyone, and the long term not so obvious is that our society wins.

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We sat idle (in terms of economic growth) for SO long ... now we're growing again.

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The long term, and not so obvious, is that these families will be earning more, and more of them will be earning.

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I respectfully ***** ***** the tax overhaul was not a good thing.

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Customer reply replied 1 month ago
I am just making an observation I didn't say the change was an all together bad thing. However, it remains to be seen whether the families will earn more and if more families will be earning.

Economically, when there is growth, demand is created, jobs are created, companies are more profitable AND AFTER tax profits are now higher because of the MUCH lower business tax rates.

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I would submit that you will see it. We are now already at what most economists call full employment (less than 5%).

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GDP should solidly bump up to 3.0% in 2018, after 2017’s 2.3% pace, according to Kiplinger and every other economist I've heard.

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Improving business profitability will generate business investment, which generates jobs ... AND at full employment we have a situation where supply and demand for labor drive wages up.

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But, hey, just this guy's opinion.

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Please let me know if you have ANY questions at all, before rating me.

If this has helped, and you DON’T have other questions … I'd appreciate a positive rating (using the stars on your screen, and then clicking “submit")

That’s the only way JustAnswer.com will credit me for the work.

...

I hope you’ll rate me based on accuracy and thoroughness, rather than any good news / bad news content

But again, let me know if you need more here,

Lane

Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,007
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Lane and 87 other Tax Specialists are ready to help you
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Customer reply replied 1 month ago
Indeed that is only fair to be judged on accuracy and thoroughness. I kind of expected the answer you provided. Thank you.

Wish there could have been more specific good news for you. I appreciate that

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Lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,007
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Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986

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