2018 Standard Deduction

Singles and married filing separate get a $12,000 standard deduction. The standard deduction for head of household is $18,000. Joint filers get $24,000. Singles and head of household get an additional $1,600 when they turn 65 and married filers get an additional $1,300 each at age 65.

Miscellaneous Itemized Expenses

Miscellaneous itemized expenses including unreimbursed employee business expenses, office in the home expenses for employees, union and professional dues, appraisal fees, hobby expenses up to hobby income, tax preparation fees, safety deposit box fees, job hunting expenses, attorney fees for tax matters, and investment management fees are now gone for 2018 tax returns. Hopefully the increase in the standard deduction will cover what you used to deduct in this area.

Obamacare Penalty

The Obamacare penalty will still be applicable for 2018 tax returns. If you don't have qualified health insurance (the individual mandate) in 2018, you will be subject to substantial penalties. In 2019, the penalty goes to 0 so you will not be forced to have health insurance coverage.

The New Child Tax Credit

Under the new tax act effective 1/1/2018, families with children really do well. The credit has increased to $2,000 per child 16 and under from $1,000. Even if tax is 0, $1,400 of each $2,000 is refundable. Older children and other dependents also qualify for a new $500 credit.

Opportunity Zones

Governors of 18 states have set up qualified opportunity zones on April 19, 2018 where new investment can be eligible for preferential tax treatment. An opportunity zone is an economically distressed area. The Federal government is trying to direct development dollars to these areas and create jobs. It is estimated that these areas will attract 6 trillion dollars from investors. Why would investors want to do this? They get to defer any capital gains even short term gains if they reinvest their capital gains in an opportunity zone within 180 days. The process is somewhat similar to like kind exchanges except that you don't have to reinvest basis and you don't need an escrow agent. It is a temporary deferral. You have to recognize the capital gains on the earlier of the disposal of the opportunity zone investment or 12/31/2026. If you hold the investment for 5 years,  you get to exclude 10% of the deferred capital gains from tax. Holding for 7 years gives you a 15% exclusion. The investment in the opportunity zone also grows tax free like a Roth if you hold it for 10 years. The list of approved opportunity zones can be found at Opportunity Zones Resources and will be continually updated.