After much speculation and anticipation, the “Tax Cuts and Jobs Act” was passed into law on December 22nd, 2017. This law will affect your 2018 return, which will be filed in 2019.
The new law removes the $4,150 personal exemption for each dependent on your tax return. However, the law raises the child tax credit from $1,000 to $2,000 per child under age 17. A new $500 nonrefundable credit is also available for any non-child dependents or dependents that do not qualify for the child tax credit.
Alimony (also referred to as spousal support) is no longer deductible for the payer, nor included as income for the recipient. This is only for orders made after December 31, 2018. Alimony agreements made prior to this date are grandfathered in, and are still deductible for the payer and included in income for the recipient.
529 plans (college savings plans) are now able to use proceeds of up to $10,000 a year for tuition incurred for public or private elementary or secondary school. Prior rules regarding post-secondary education are still in place.
Our articles are not intended to be tax advice. To seek tax advice regarding your specific tax situation, it is best practice to consult with a Certified Public Accountant.