In December 2017, Congress passed the “Tax Cuts and Jobs Act” bill which resulted in several significant changes to U.S. tax code. As Medallion and its sister company owner-operators start filing their 2018 taxes, the important information below will help ease the process.
Longtime Medallion Transport Holdings partner, ATBS, created an in-depth analysis of how this will affect taxes for owner-operator truck drivers. The complete guide can be downloaded on the ATBS site.
Below is an overview of some of the most important topics in the guide.
Standard Deduction & Tax Rate
The standard deduction increased for single to $12,000, for head of household to $18,000 and for married filing joint to $24,000.
The “Tax Cuts and Jobs Act” bill changed how deductions can be itemized. According to ATBS, you should not use the itemized deduction if it is less than $12,000 if you are filling single, or less than $24,000 if you are married and filing joint.
You can consider itemizing if you:
- Made substantial charitable donations
- Paid mortgage interest or property taxes on your home
- Had large amounts of out-of-pocket medical expenses
- Uninsured losses from theft or casualty in a federally declared disaster location
Qualified Business Income Deduction
You can qualify for a 20% deduction on your adjusted gross income that reduces your tax liability if you fall below
- $157,500 – $207,500 if you single, head of household and married filing single
- $315,000 – $415,000 if you are married filing jointly
Unlike average Americans, owner-operators may need more than one form when filing their tax return. Click here to view the types of schedules and what would classify you to need one.
The new tax laws allow owner-operator truck drivers to take an immediate first-year deduction on any asset in the same year that it was purchased. Also, any qualified property purchased and placed in service between September 27, 2017 and January 1, 2024 can be depreciated by 100% and recognized as an expense to lower your taxable income.
Child Tax Credit and Family Tax Credit
There is a child and family tax credit, basically an amount of money taxpayers can subtract directly from the taxes they owe. More info on the Child & Family Tax Credit.
Under the new laws, there is a 100% bonus depreciation, click here to understand how it works.
Affordable Care Act Mandate/Penalty
For 2018 tax year, you must have health insurance or pay a penalty. For an individual the penalty is 2.5% of taxable income. To better understand possible penalties for individuals and families, click here.