The Tax Cuts and Jobs Act of 2017 (TCJA) will bring many changes to people's personal income tax returns in California and elsewhere. Many of the changes are effective in the 2018 tax year, and will be reflected in people's tax returns filed in 2019. The far-reaching changes may necessitate revisions in the estate planning programs that people have established, so that it is important to check with the estate planning attorney and any tax specialist who assisted in establishing one's estate plan.
The changes made by the TCJA are far too voluminous and complex to fully discuss in this article. It is possible, however, to identify a few of the highlights and give some general ideas of their import. It can be noted, for example, that the standard deduction for individuals and that for married couples will just about double in 2018 over 2017. At the same time, personal exemptions have been eliminated up until 2025.
Health savings accounts are used for paying medical bills of the account holder and his or her dependents. These are designed to cover expenses where there is no health insurance policy in effect for the covered persons. There are also Medical Savings Accounts, which apply to self-employed individuals and to persons enrolled in Medicare. The qualifications, restrictions and requirements of these various programs are complex and must be gone over with plan administrators and with one's tax specialist. The federal estate tax exclusion of $5,490,000 in 2017 has gone up to $11,200,000 in 2018.
Various changes have been made to the rules on retirement plan contributions, including IRAs, which should be discussed with one's tax adviser. Residents of different states may see tax increases due to not getting the benefit of certain deductions and/or credits that were previously available. Residents of California and other highly populated states may see a higher net tax due to these various changes that will modify benefits previously available under state laws. Those who have established estate plans will benefit by consulting with their estate planning attorney to see if any documents need to be changed.
Source: mymcmedia.org, "Important Tax Changes for 2018", Juanita Farmer, Jan. 2, 2018