GringoPost | Ecuador: Tax reform 2018 explained

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Tax reform 2018 explained

The US congress has passed the largest piece of tax reform legislation in more than three decades. The bill went into place on January 1, 2018, which means that it will affect the taxes of most taxpayers for the 2018 tax year. In this reform, personal exemptions have been suspended through 2025. But standard deductions nearly double under the new rules. That is,
If you filed your taxes for 2017, you should have received a personal exemption of $4,050 for yourself and each of your dependents. Your personal exemption was subtracted from your taxable income in addition to your standard or itemized deductions. The Tax Cuts and Jobs Act has eliminated this exemption, increasing the standard deduction to $24,000 ($12,000 if you are a single filer). For families with few children, this could be good news. But if you have several children or your dependents are over age 17, this could mean that more of your income is taxable.
So, for many Americans, a tax cut is possible — depending, of course, on your unique situation. However, with those tax cuts comes a limitation for deductions as well. A reduced deduction for mortgage interest and a capped deduction for state and local taxes could have a big impact on your taxable income, especially when accompanied by the disallowance of deductions such as unreimbursed employee expenses, tax preparation fees, personal exemptions, dependency exemptions, and theft and personal casualty losses. These new rules could increase your taxable income and make the tax cuts completely irrelevant.

Puertas del Sol, Cuenca. ASAP

Kay Forgione, Tax Accountant: kayforgione@gmail.com 098 384 1776