FILING 2018 STATE & FEDERAL TAXES
The Tax Center at Marine Corps Base, Camp Lejeune will open for the preparation and filing of individual federal and state income taxes on Monday, 28 January 2019.
The Tax Center at Marine Corps Air Station, New River will open for the preparation and filing of individual federal and state income taxes on Tuesday, 29 January 2019.
FREE TAX PREPARATION AND ELECTRONIC FILING
The Camp Lejeune Tax Center is located in Building 50 on Lucy Brewer. The operating hours are as follows:
Monday, Tuesday, Thursday and Friday………………. 0800 - 1800
Wednesday for Unit/Individual Appointments……….... 0800 - 1600
Saturdays………………………………………………...0800 - 1200
For Unit and Individual Appointments telephone at 910-451-5287.
The New River Tax Center is located on the second floor of Building AS-216 on Bancroft Street. The operating hours are as follows:
Tuesday, Wednesday and Thursday………………….0800 - 1700
The Tax Centers will prepare Tax Returns for the last three years. If you are deployed, you and your spouse have 180 days from the time you leave the deployment area to prepare your tax return
OVERVIEW OF THE TAX CUTS and JOBS ACT:
Major tax reform that affect both individuals and businesses was enacted in December 2017. It is commonly referred to as the Tax Cuts and Jobs Act, TCJA or tax reform.
We want to provide information for you and your family to help you understand, take action – if necessary – and comply with your federal return filing requirements. Listed below are some of the new changes for 2018 and beyond.
Changes in Tax Rates:
For 2018, most tax rates have been reduced. This means most people will pay less tax starting this year. The tax rates are 10%, 12%, 22%, 24%, 32%, 35%, and 37%.
In addition, for 2018, the tax rates and brackets for the unearned income of a child have changed and are no longer affected by the tax situation of the child’s parents. The new tax rates applicable to a child’s unearned income of more than $2,550.00 are 24%, 35%, and 37%.
In addition to lowering the tax rates, some of the changes in the law that affect you and your family include increasing the standard deduction, suspending personal exemptions, increasing the child tax credit, and limiting or discontinuing certain deductions.
Most of the changes in this legislation take effect in 2018 for tax returns filed in 2019.
Changes to Standard Deduction:
The standard deduction is a dollar amount that reduces the amount of income on which you are taxed and varies according to your filing status.
The standard deduction reduces the income subject to tax. The Tax Cuts and Jobs Act nearly doubled standard deductions. When you take the standard deduction, you cannot itemize deductions for mortgage interest, state taxes, and charitable deductions on Schedule A, Itemized Deductions.
Starting in 2018, the standard deduction for each filing status is:
Single…………………………………………..$12,000.00 (up from $6,350.00 in 2017)
Married filing jointly/Qualifying widow(er)…..$24,000.00 (up from $12,700.00 in 2017)
Married filing separately……………………….$12,000.00 (up from $6,350.00 in 2017)
Head of household……………………………...$18,000.00 (up from $9,350.00 in 2017)
The amounts are higher if you or your spouse are blind or over age 65.
Married Filing Jointly $1,300.00 (or $2,600.00 if both qualify)
Most taxpayers have the choice of either taking a standard deduction or itemizing. If you qualify for the standard deduction and your standard deduction is more than your total itemized deductions, you should claim the standard deduction in most cases and do not need to file a Schedule A, Itemized Deductions, with your tax return.
This means that many taxpayers will no longer itemize their deductions and have a simpler time in filing their taxes.
Changes to Itemized Deductions:
In addition to nearly doubling standard deductions, the Tax Cuts and Jobs Act changed several itemized deductions that can be claimed on Schedule A, Itemized Deductions. Many individuals who formerly itemized may now find it more beneficial to take the standard deduction.
You may not take the standard deduction if you claim itemized deductions. Alternatively, if you take the standard deduction, you may not claim itemized deductions. For married filing separate taxpayers, if one spouse elects to itemize, the other spouse is also required to itemize. That is why it is important that you consider what these changes mean for you and your family.
Limit on Overall Itemized Deductions Suspended:
You may be able to deduct more of your total itemized deductions if your itemized deductions were limited in the past due to the amount of your adjusted gross income. That old rule that limited the total itemized deductions for certain higher-income individuals has been suspended. That means that if you do itemize, your itemized deductions are no longer limited if your adjusted gross income is over a certain amount.
Deduction for Medical and Dental Expenses Modified:
You can deduct certain unreimbursed medical expenses that exceed 7.5% of your 2018 adjusted gross income. Before this law change, unreimbursed medical expenses had to exceed 10% of adjusted gross income for most taxpayers in order to be deductible.
This means that, if you do itemize, you can deduct the part of your eligible medical and dental expenses that is more than 7.5% of your 2018 adjusted gross income.
If you plan to itemize for tax year 2019, you unreimbursed medical and dental expenses will have to exceed 10% of your 2019 adjusted gross income in order to be deductible.
Deduction for State and Local Income, Sales and Property Taxes Modified:
Your total deduction for state and local income, sales and property taxes is limited to a combined, total deduction of $10,000.00 ($5,000.00 if Married Filing Separate). Any state and local taxes you paid above this amount cannot be deducted. No deduction is allowed for foreign real property taxes. Property taxes associated with carrying on a trade or business are fully deductible.
This means that, if you do itemize, you can deduct state and local income, sales, and property taxes but only up to $10,000.00 ($5,000.00 if Married Filing Separate).
Deduction for Home Mortgage and Home Equity Interest Modified:
Your deduction for mortgage interest is limited to interest you paid on a loan secured by your main home or second home that you used to buy, build, or substantially improve your main home or second home. That means that, if you do itemize, that interest paid on most home equity loans is not deductible unless the loan proceeds were used to buy, build, or substantially improve your main home or second home.
For example, interest on a home equity loan used to build an addition to an existing home is typically deductible, while interest on the same loan used to pay person living expenses, such as credit card debts, is not.
As under the prior law, the loan must be secured by the taxpayer’s main home or second home (known as a qualified residence), not to exceed the cost of the home and meet other requirements.
New Dollar Limit on Total Qualified Residence Loan Balance:
The date you took out your mortgage or home equity loan may also impact the amount of interest you can deduct. If you loan was originated or treated as originating on or before December 15, 2017, you may deduct interest on up to $1,000,000.00 ($500,000.00 if you are married and filing separately) in qualifying debt. If your loan originated after that date, you may only deduct interest on up to $750,000.00 ($375,000.00 if you are married filing separately) in qualifying debt. The limits apply to the combined amount of loans used to buy, build, or substantially improve the taxpayer’s main home and second home.
This means that, if you do itemize, for existing mortgages, you can continue to deduct interest on a total of $1 million in qualifying debt secured by first and second homes but for new homeowners buying in 2018, you can only deduct interest on a total of $75,000.00 in qualifying debt for a first and second home.
Limit for Charitable Contributions Modified:
The limit on charitable contributions of cash increased from 50% to 60% of your adjusted gross income. This means that, if you itemize, you may be able to deduct more of your charitable cash contributions this year.
Deductions for Casualty and Theft Losses Modified:
Net personal casualty and theft losses are deductible only to the extent they are attributable to a federally declared disaster (Hurricane Florence). Claims must include the FEMA code assigned to the disaster. The loss must still exceed $100.00 per casualty and the net total loss must exceed 10% of your adjusted gross income. In addition, you can still elect to deduct the casualty loss in the tax year immediately preceding the tax year in which you incurred the disaster loss.
This means that, if you do itemize, your personal casualty and theft losses must be attributable to a federally declared disaster.
Miscellaneous Itemized Deductions Suspended:
The previous deduction for job-related expenses or other miscellaneous itemized deductions that exceeded 2% of your adjusted gross income is suspended. This includes unreimbursed employee expenses such as uniforms, union dues, and the deduction for business-related meals, entertainment and travel, as well as any deductions you may have been previously been able to claim for tax preparation fees and investment expenses, including investment management fees, safe deposit boxes fees and investments from pass-through entities. The business standard mileage rate listed in Notice 2018-03 cannot be used to claim an itemized deduction for unreimbursed employee travel expenses during the suspension.
This means that, if you do itemize, if your miscellaneous itemized deductions previously needed to exceed 2% of your adjusted gross income, they are no longer deductible.
Deduction and Exclusion for Moving Expenses Suspended:
The deduction for moving expenses is suspended. No deduction is allowed for use of a vehicle as part of a move. This suspension does not apply to members of the Armed Forces on active duty who move pursuant to military orders related to a permanent change of station.
Also, employers will include moving expense reimbursements as taxable income in the employee’s wages because the new law suspends the former exclusion from income for qualified moving expense reimbursements from an employer. This suspension does not apply to members of the Armed Forces on active duty who move pursuant to permanent change of station orders as long as the expenses would qualify as a deduction if the government did not reimburse the expense. This means that, unless you are an active duty member of the military, you cannot deduct moving expenses and amount reimbursed by an employer will be taxable income.
Deduction for Personal Exemptions Suspended:
For 2018, you cannot claim a personal exemption for yourself, your spouse, or your dependents. This means that you will not be able to reduce your income that is subject to tax by the exemption amount for each person included on your tax return like you have in the past.
Child Tax Credit and Additional Child Tax Credit:
For 2018, the maximum credit increased to $2,000.00 per qualifying child. Up to $1,400.00 of the credit can be refundable for each qualifying child as the additional child tax credit. Additionally, the income threshold at which the child tax credit begins to phase out is increased to $200,000.00, or $400,000.00 if married filing jointly. This means that more families with children under 17 qualify for the larger credit.
Credit for Other Dependents:
A new credit of up to $500.00 is available for each of your qualifying dependents other than children who can be claimed for the child tax credit. The qualifying dependent must be a U.S. citizen, U.S. national, or U.S. resident alien. The credit is calculated with the child tax credit in the form instructions. The total of both credits is subject to a single phase out when adjusted gross income exceeds $200,000.00, or $400,000.00 if married filing jointly.
This means that you may be able to claim this credit if you have children 17 or over, including college students, children with Individual Taxpayer Identification Numbers (ITINs), or other older relatives in your household.
Social Security Number Required for Child Tax Credit:
Beginning with Tax Year 2018 (not calendar year 2018), your child must have a Social Security Number issued by the Social Security Administration before the due date of your tax return (including extensions) to be claimed as a qualifying child for the Child Tax Credit or Additional Child Tax Credit. Beginning with Tax Year 2018, children with an ITIN cannot be claimed for either credit.
If your child’s immigration status has changed so that your child is now a U.S. citizen or permanent resident but the child’s social security card still has the words “Not valid for employment” on it, you need to ask the Social Security Administration for a new social security card without those words.
If your child does not have a valid social security number, you child may still qualify for the Credit for Other Dependents if your child lived with you in the United States and has an ITIN.
Combat Zone Tax Benefits Available to Members of the Armed Forces who Served in the Sinai Peninsula:
Under the Tax Cuts and Jobs Act, members of the U.S. Armed Forces who performed services in the Sinai Peninsula can now claim combat zone tax benefits retroactive to June 2015.
Alternative Minimum Tax (AMT) Exemption Amount Increased:
The AMT exemption amount is increased to $70,300.00 ($109,400.00 if married filing jointly or qualifying widow(er); $54,700.00 if married filing separately). The income level at which the AMT exemption begins to phase out has increased to $500,000.00 or $1,000,000.00 if married filing jointly. This means that fewer taxpayers will pay the Alternative Minimum Tax (AMT).
Treatment of Student Loans Discharged on Account of Death or Disability Modified:
The Tax Cuts and Jobs Act modifies the exclusion of student loan discharges from gross income, by including within the exclusion certain discharges on account of death or disability. It applies to discharges after December 31, 2017, and before January 1, 2026. This means that student loans discharged due to death of disability are not included in income.
Repeal of Deduction for Alimony Payments:
Alimony and separate maintenance payments are no longer deductible for any divorce or separation agreement executed after December 31, 2018, or for any divorce or separation agreement executed on or before December 31, 2018, and modified after that date. Additionally, alimony and separate maintenance payments are no longer included in income based on these dates so you do not need to report these payments on your tax return if the payments are based on a divorce or separation agreement executed or modified after December 31, 2018. This means that for 2019, any alimony payments or payments for spousal support will not be deductible for the spouse who makes the payments and will not be included as income for the receiving the payments.
Reporting Health Care Coverage:
Under the Tax Cuts and Jobs Act, you must continue to report coverage, qualify for an exemption, or report an individual shared responsibility payment for Tax Year 2018. Most taxpayers have qualifying health care coverage or a coverage exemption for all 12 months in the year, and will check the box on the front of their tax return.
This means that, for tax year 2018, the IRS will not consider a return complete and accurate if you do not report full-year coverage, claim a coverage exemption, or report a shared responsibility payment on the tax return. For 2019, the shared responsibility payment is reduced to zero under the TCJA for tax year 2019 and all subsequent years.
Re-characterization of a Roth Conversion:
You can no longer re-characterize s conversion from a traditional IRA, SEP or SIMPLE to a Roth IRA. The new law also prohibits re-characterizing amounts rolled over to a Roth IRA from other retirement plans, such as 401(k) or 403(b) plans. You can still treat a regular contribution made to a Roth IRA or to a traditional IRA as having been made to the other type of IRA.
Plan Loans to an Emplo0yee that Leaves Employment:
If you terminate employment (or if the plan is terminated) with an outstanding plan loan, a plan sponsor may offset your account balance with the outstanding balance of the loan. If a plan loan is offset, you have until the due date, including extensions, to rollover the loan balance to an IRA or eligible retirement plan.
Disaster Relief – Retirement Plans:
Laws enacted in 2017 and 2018 make it easier for retirement plan participants to access their retirement plan funds to recover from disaster losses incurred in federally declared areas in 2016, 2017 and 2018. This disaster relief may allow affected taxpayers to:
Waive the 10% additional tax on early distributions and
Include a qualified hurricane distribution in income over a 3 year period
Repay their distributions to the plan
Have expanded loan availability
Extend the loan repayment period
ABLE Accounts – Rollovers from a 529 Plan:
You can contribute more to your Achieving a Better Life Experience (ABLE) account. You may also rollover limited amounts from a 529 qualified tuition program account of a designated beneficiary to the ABLE account of the designated qualified beneficiary to their family member.
Beginning in 2018, the Saver’s Credit can be taken for your contributions to an ABLE account if you are the designated beneficiary.
The Tax Cuts and Jobs Act also enable eligible individuals with disabilities to put more money into their ABLE accounts, qualify for the Saver’s Credit in many cases and roll money from their 529 plans into their ABLE accounts.
One of the Tax Cuts and Jobs Act changes allows distributions from 529 plans to be used to pay up to a total of $10,000 of tuition per beneficiary (regardless of the number of contributing plans) each year at an elementary or secondary (K -12) public, private or religious school of the beneficiary’s choosing.
What will I need to have my tax returns prepared?
W2 Forms (wages or salaries from all employment during the year)
Interest from checking or saving accounts, bonds, CDs, or brokerage accounts
State Tax Refund (if itemized)
Pension and/or IRA Distribution (1099 -R)
Unemployment Income (1099-G)
Other Income such as gambling winnings, awards, prizes and jury duty
Education Expenses (1098-T)
Home Mortgage interest (1098)
Real Estate Tax/Personal Property Tax
Child/Dependent Care Expense (Child care provider Id or SSN)
Estimated Tax Payments
Bank Account Information to Electronically ile tax return (voided check or deposit slip)
Power of Attorney, if filing a joint return
Social Security Card/ITIN numbers for all Dependents claimed on tax return
All Rental Property Information, if claiming rental income (Maximum of 3 rental
Any other information you think will help properly prepare your tax return
IRS Form (Form 13614-C) Intake/Interview & Quality Review Sheet
2018 Earned Income Tax Credit Information
To be eligible for a full or partial credit, the taxpayer must have earned income of at least $1 but less than:
$49,194 ($54,884 married filing jointly) with three or more qualifying children
$45,802 ($51,492 married filing jointly) with two qualifying children
$40,320 ($46,000 married filing jointly) with one qualifying child
$15,270 ($20,950 married filing jointly) with no qualifying child
Tax Year 2018 maximum credit:
$6,431 with three or more qualifying children
$5,716 with two qualifying children
$3,461 with one qualifying child
$519 with no qualifying child
Definition of a Qualifying Child
Provides that a qualifying child for purpose of the child tax credit, head of household, earned income credit, and credit for child and dependent care expenses must be all of the following:
Relationship: (1) Your son, daughter, adopted child, stepchild, foster child, or a descendent of any of them such as your grandchild or (2) Brother, sister, half brother or sister, step brother or sister, or a descendent of any of them such as a niece or nephew.
Age: (1) At the end of the filing year, your child was younger than you (or your spouse if you file a joint return) and younger than 19 or (2) At the end of the filing year, your child was younger than you (or your spouse if you file a joint return) younger than 24 and a full-time student or (3) At the end of the filing year, your child was any age and permanently and totally disabled.
Residency: The child must live with you (or your spouse if you file a joint return) in the United States for more than half of the year. United States means the 50 states and District of Columbia. It does not include Puerto Rico or U.S. possessions such as Guam.
Support: The child cannot have provided over half of his or her own support during the year.
Only one person can claim the same child. If a child qualifies for more than one person and one of the persons is a parent or parents, the non-parent can claim the child only if their AGI is higher than the parent(s).
Head of Household – in order to claim Head of Household, you have to have a qualifying person in the home.
Married Filing Separate cannot take EITC. Investment income must be $3,500 or less for the year.
Standard Mileage Rate:
54.5 cents per mile for business miles driven.
18 cents per mile driven for medical or moving purposes.
14 cents per mile driven in service of charitable organizations
Deductible Long-Term Care Premium
The maximum amount of qualified long-term care premiums includable as medical expenses has increased. Qualified long-term care premiums up to the amounts shown below can be included as medical expenses on Schedule A (Form 1040) itemized Deductions.
$ 420.00: age 40 or under
$ 778.00: age 41 to 50
$1,560.00: age 51 to 60
$4,160.00: age 61 to 70
$5,200.00: age 71 and older
American Opportunity Credit for 2018 is gradually reduced (phased out) if taxpayer’s MAGI is between $80,000 and $90,000 ($160,000 and $180,000 if married filing jointly). Taxpayers can claim full credit if your MAGI is $80,000 or less ($160,000 or less if married filing jointly). Taxpayers cannot claim a credit if their MAGI is $90,000 or more ($180,000 or more if married filing jointly). There is a maximum annual credit of $2,500.00 per qualifying student. To claim the American opportunity, taxpayers must provide the educational institution’s employer identification number (EIN) of Form 8863. Taxpayers should be able obtain this information from Form 1098-T or the education institution.
Lifetime Learning Credit for 2018 is gradually reduced (phased out) if taxpayers’ MAGI is between $56,000 and $66,000 ($112,000 and $132,000 if married filing jointly). Taxpayers cannot claim a credit if their MAGI is $66,000 or more ($132,000 or more if married filing jointly).
Student loan interest deduction begins to phase out for taxpayers with MAGI in excess of $65,000 ($135,000 for joint returns) and is completely phased out for taxpayers with MAGI of $80,000 or more ($165,000 or more for joint returns).
Deduction Amount and Modified Limit for Traditional IRA Contributions Increased
For 2018, the maximum IRA deduction remains at $5,500 ($6,500 if age 50 or older). For taxpayers who are covered by a retirement plan at work, the deduction for contributions to a traditional IRA is reduced (phased out) depending on the modified AGI. See the chart below:
Filing Status Modified AGI is The You Can Take
Single or Head of $63,000 or less Full deduction up to the amount
Household of your contribution limit
More than $63,000 but A partial deduction
less than $73,000
More than $73,000 No deduction
Married filing jointly or $101,000 or less Full deduction up to the amount of
Qualifying Widow(er) your contribution limit
More than $101,000 but A partial deduction
less than $121,000
$121,000 or more No deduction
Married filing separately Less than $10,000 A partial deduction
$10,000 or more No deduction
If you file separately and did not live with your spouse at any time during the year, your IRA deduction is determined under the “single” filing status.
As of January 1, 2014, the State of North Carolina will no longer allow any exclusion for retirement income. This includes all retirement (public or private) that does not qualify under the Bailey Settlement.
Social Security Cards
The Social Security Administration will no longer issue Social Security Number verification printouts. Taxpayers who have lost or misplaced their social security card will need to apply for a replacement via mail or in person at the local SSA field office. This process will take 7 – 10 business days. You will need to wait for your card in the mail before arriving at the Base Tax Center. The nearest Social Security Office is located in New Bern, NC. Please visit www.ssa.gov or call 1.888.491.1885 for business hours and directions.