What are the things you need to know about Income tax?

Income Tax | Tax Calculator
When the season of tax filing, we all get nervous for some time. What are the documents, which credits to claim and which forms need to get filled? So, one of those things is income tax. Here we will tell you about what are various things you need to know about. If you find any difficulty, then using the Income Tax Calculator is a good idea. After all, you want to ease up things since you need to do many things when filing taxes. We will tell you about the new deduction, itemized deductions and many other things. These are essential points about Income tax. Now, let’s get started

The new Income tax Brackets

Now, if you are updated with the news, you will see the income brackets have been updated. Whatever your status is, it will get affected. However, the tax rate does not change, but the income part has been changed. So, let’s see. If you

Tax rate      Income level

 Single filers                            Married couples filing jointly (and qualifying widows or widowers)

10%            $0 to $9,700                                                                             $0 to $19,400

12%            $9,701 to $39,475                                                                 $19,401 to $78,950

22%            $39,476 to $84,200                                                               $78,951 to $168,400

24%            $84,201 to $160,725                                                             $168,401 to $321,450

32%            $160,726 to $204,100                                                           $321,451 to $408,200

35%            $204,101 to $510,300                                                           $408,201 to $612,350

37%            $510,301 or more                                                                  $612,351 or more

So, these are the new ranges for single and married couples. As we said, you can use an income tax calculator in case you find it tough to do it manually. Now, let’s see the next change.

The increase in Standard Deduction of Income Tax

Now, we will talk about the standard deduction. Tax Cuts and Jobs Act of 2017(TCJA) has made the deduction double. Since it was increased, few people had itemized their deductions following in 2018. When you file taxes, due to inflation adjustment, The deduction will change. For singles, it will be around $12,200 and for married couples, it will be approximately $24,400. For those who are single household and have one dependent will get around $18,350 with Standard deduction. This is again, important points about income tax. You may use the income Tax Calculator to calculate your income tax.

The Status of Itemized deduction of Income Tax Calculator

We will see how the itemized deduction is affected. Well, they have not changed. But many of itemized deduction has been eliminated. For example, unreimbursed job expenses, Investment advisor fees and Tax Refund fees are some of the itemized deduction which got eliminated. Some items are even got limited. So, here we will tell you about some of the following rules which are not changed. You won’t have to worry in case you are wondering about it.

  • The deduction for real estate, property taxes and local income tax is sealed at $10,000.
  • The mortgage interest loan is capped as well at around $75, 0000.
  • If your medical expenses are higher than 10% of your adjusted gross income (AGI), then you can deduct it in 2019.
  • If you have done any charity, then you will get the deductions. But, the limit is at 60% of your AGI.
  • There are no miscellaneous Itemized deductions.

So, these are the status of itemized deductions. Some have been changes, some have been eliminated and some are remains as before.

What about Child Tax credit?

If you have kids, then this section is essential for you. You should know TCJA have increased. If your child qualifies for it, then you will be able to claim up to $2,000 per child, however for higher-income like more than $150,000. Then you may not be able to claim much. It would go as far as $500. However in any confusion, you should meet with a tax professional to clear the things. So, now you can see why it is essential to know about these crucial points about income tax.

What about Health savings account?

Now, the rules regarding contributing to HSA have been altered. You can provide around $3500 for a person. If you are doing it for the family then you can invest up to $7,000. If you are older than 55, then you can contribute an extra $1000.However, before you think of adding, you need to get enrolled in a health plan first. But if you think why to do it in the first place, then it would be better to read about it first, then invest in it.

Conclusion

So, these are the critical points we wanted to tell you about tax. As we said, before if you find it challenging to do the calculations, using the Income tax calculator is a good idea.