The value for each of our personal and dependent exemptions has been raised $100 each to $3,500. So my friend and her husband who had their baby in July will have exemptions totaling $10,500.
The standard deduction is now $10,900 for married filing jointly returns an $5,450 for singles and marrieds filing separately.
The IRS says nearly 2/3 of taxpayers take the standard deduction rather than itemizing things like mortgage interest, real estate taxes, state taxes, and charitable donations.
There are phase out income restrictions on both the exemption and deductions (itemized and standard) amounts. The more income, the less allowable subtractions.
For married couples filing jointly the line between the 15% and the 25% federal brackets is not $65,100.
Other limits have changed regarding Roth IRAs and deductible traditional IRAs. A quick trip to irs.gov can be helpful with decisions.
The bottom line is the more one makes the less the subtractions allowed and the higher the tax bracket. Also the less one can save under the umbrellas of deductible and Roth IRAs.
'til later
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