Personal and Dependent Exemptions Eliminated
Many changes were made to our nation's tax laws with the passage of the Tax Cuts and Jobs Act of 2017. A significant change that will affect all taxpayers is the loss of the Personal and Dependent Exemptions. This was an exemption that lowered taxable income by $4,050 for EACH exemption claimed, one for themselves, a spouse, and every dependent claimed on a tax return. These exemptions were repealed in the new tax law, and are no longer available for tax years 2018-2025.
This significant loss of tax-exempt income could mean taxpayers with quite a few dependents may see more tax owed on their tax return. The lowering of the tax rates combined with the doubling of the Standard Deduction and an increase in the Child Tax Credit may lessen this effect, but many larger families may still feel the bite from the loss of these exemptions.
So what can you do? First, you can do a "Paycheck Checkup" at this IRS Website . Have your most recent paystubs and last year's tax return handy. This will tell you how you are doing in withholding enough taxes for the year. It has been updated to include all the recent changes in the new tax law. Then, give us a call, and we can help you decide what you can do to avoid any surprises come tax time.
Thanks for doing business with us.
101 W. 5th Street
Jamestown, NY 14701