by Alfred Burgos, President of Burgos Income Tax.Inc.
This is the second installment of Tax Cuts and Jobs Acts, TCJA or tax reform.
Personal tax rates have been reduced; this change will impact individual tax filing for 2019. Some of the changes that will affect families include increasing the standard deduction, increasing the child tax credit, suspending personal exemptions and limiting or discontinuing certain deductions.
Here are personal income tax examples of how the tax reform will benefit families in the lower income brackets. This past year Maria a single parent with 2 children under the age of 17 reported earned income of $25,714 with tax withholdings of $1,561. In 2018 she received the refundable Earned Income Tax Credit and Child Tax Credit for a total refund of $6,899. This tax year, assuming there are no changes in family, earnings and withholdings, with adjustments due to tax reform her refund would go up to $8,165. That is an increase of $1,266 that she can put away for a future home purchase or the children’s college education.
Another example, Josefina and Jose are married with 3 children under the age of 17. They reported wages of $30,269 and $388 in tax withholdings. Their refund was $8,370 in 2018. Next year it will be $9,535 with the changes to the Child Tax Credit and Earned Income Tax Credit. That’s a $1,165 increased federal tax refund.
Next installment we will talk about how TCIA will impact families in higher income brackets.
Alfred Burgos is a long time member of RHBA and past recipient of the Business Person of the Year Award.