As of December 2017, a new tax reform law has been signed into effect, affecting working parents and families in significant ways. Depending on their particular circumstances, some working parents may notice an increase in their taxes, while others may be getting a break.
If you are a working parent, here are 5 ways you and your family be impacted tax-wise going forward:
If you’re married, your family may benefit from a tax cut
The new tax bill doubles your standard deduction as a married couple, which translates into a tax cut for most families. However, if you happen to reside in an expensive city and you itemize your deductions, you may be at a disadvantage. The reason for this is that sales and property taxes, as well as state individual income deductions have been capped at a total of $10,000, which limits how much you can deduct if you are in those expensive cities.
If you’re in a high-income household, you may get a sizable break
Higher-income households, most specifically those earning between $500,000 and $1 million per year, will benefit from the biggest tax break. It may sound unfair but it’s the reality.
No such luck for single parents
If you happen to be a single parent, you may have relied previously on a number of personal exemptions that were associated with filing as “head of household”. The new tax bill has done away with these personal exemptions, which means that a single parent would incur more taxes than a married family, and this despite the doubling of the standard deduction.
You will benefit from a larger child tax credit
The child tax credit has been doubled to $2,000 from $1,000. The refundable portion is also larger than it used to be, which will benefit more lower-income families. However, in the end, wealthier families will still benefit more than single families.
our family may have access to more paid leave
The new paid tax leave credit for companies encourages businesses to offer employees earning less than $72,000 up to 12 weeks of paid leave in exchange for a tax break. This may benefit working parents who desire to take more paid leave.
Got any tax-related questions? Click HERE to contact our sister consulting website SW Consulting.
To Your Success,
The Corporate Sister