Tax Scenarios Under the New Legislation

2018 Whole Ball Of Tax

Scenario 1

Single parent, age 35, 4 children ages 5 to 15, earnings $35,000, after school program expenses $4,000, renting, residing in Massachusetts (assuming $4,000 in child care expenses)

Old Law New Law Difference
Taxable Wages $35,000 $35,000 $0
Adjusted Gross Income $35,000 $35,000 $0
Standard Deduction ($9,550) ($18,000) $8,450
Personal Exemptions ($20,750) $0 ($20,750)
Taxable Income $4,700 $17,000 $12,300
Tax $470 $1,768 $1,298
Child Care Credit ($470) ($1,000) $530
Child Tax Credit ($4,000) ($5,643) $1,643
Earned Income Credit ($3,011) ($3,011) $0
Tax Due (Refund) ($7,011) ($7,886) ($875)


Scenario 2

Married couple, ages 40, 2 children ages 8 and 10, earnings of $45,000 and $30,000, living in California, after school program expenses $3,000, mortgage interest $18,000, property taxes $12,000

Old Law New Law Difference
Taxable Wages $75,000 $75,000 $0
Adjusted Gross Income $75,000 $75,000 $0
Mortgage Interest Deduction ($18,000) ($18,000) $0
Real Estate & Sales Taxes ($13,251) ($10,000) ($3,251)
Personal Exemptions ($16,600) $0 ($16,600)
Taxable Income $27,149 $47,000 $19,851
Tax $3,120 $5,259 $2,139
Child Care Credit ($600) ($600) $0
Child Tax Credit ($2,000) ($4,000) $2,000
Tax Due (Refund) $520 $659 $139


Scenario 3

Married couple, ages 50 and 46, 2 children ages 19 and 21 in college, tuition and fees $35,000, earnings $200,000 and $20,000, net long-term capital gains $3,000, charitable contributions $5,000, mortgage interest $18,000, property taxes $22,000, 401(k) contributions $24,000, living in Michigan

Old Law New Law Difference
Taxable Wages $196,000 $196,000 $0
Capital Gains $3,000 $3,000 $0
Adjusted Gross Income $199,000 $199,000 $0
Mortgage Interest Deduction ($18,000) ($18,000) $0
Real Estate & Income Taxes ($29,778) ($10,000) ($19,778)
Charitable Contributions ($5,000) ($5,000) $0
Personal Exemptions ($16,600) $0 ($16,600)
Taxable Income $129,622 $166,000 $36,378
Tax $23,413 $28,189 $4,776
Alternative Minimum Tax $379 ($379)
Child Tax Credit ($0) ($1,000) $1,000
Tax Due (Refund) $23,792 $27,189 $3,397


Scenario 4

Retired couple, ages 72 and 70, $40,000 in Social Security, $25,000 in pension income, no dependent children, living in Florida, no mortgage, property taxes $12,000, charitable contributions $5,000

Old Law New Law Difference
Taxable Pension $25,000 $25,000 $0
Taxable Social Security $6,850 $6,850 $0
Adjusted Gross Income $31,850 $31,850 $0
Real Estate & Sales Taxes ($12,908) ($0) ($12,908)
Charitable Contributions ($5,000) ($0) ($5,000)
Standard Deduction ($0) ($26,600) $26,600
Personal Exemptions ($8,300) ($0) ($8,300)
Taxable Income $5,642 $5,250 ($392)
Tax $564 $525 ($39)
Tax Due (Refund) $564 $525 ($39)


Scenario 5

Married couple, ages 55, no dependent children, earnings $700,000 all by one spouse, mortgage interest $20,000, property taxes $25,000, living in Illinois, net long-term capital gains $20,000, charitable contributions $40,000, 401(k) contribution $24,000. Business paid $200,000 in wages. Health Insurance costs of $7,000.

Old Law New Law Difference
Business Income $700,000 $700,000 $0
Capital Gains $20,000 $20,000 $0
Self Employment Tax Deduction ($17,335) ($17,335) $0
Self Employed Health Ins. Deduction ($7,000) ($7,000) $0
Retirement Plan Deduction ($24,000) ($24,000) $0
Adjusted Gross Income $671,665 $671,665 $0
Real Estate & Income Taxes ($56,781) ($10,000) ($46,781)
Mortgage Interest ($20,000) ($20,000) $0
Charitable Contributions ($40,000) ($40,000) $0
Sec. 68 Reduction $10,550 ($0) $10,550
Personal Exemptions ($0) ($0) $0
Qualified Bus. Inc. Deduction ($0) ($100,000) $100,000
Taxable Income $565,434 $501,665 ($63,769)
Income Tax $164,136 $123,962 ($40,174)
Self Employment Tax $34,669 $34,669 $0
Net Investment Income Tax $724 $749 $25
Additional Medicare Tax $3,568 $3,568 $0
Tax Due (Refund) $203,097 $162,948 ($40,149)


Scenario 6

Divorced man, age 60, $100,000 income, $20,000 in alimony, one child age 20 in college with tuition of $20,000 which he pays (providing over ½ of support), renting, charitable contributions $4,000, 401(k) contribution $24,000 living in Texas

Old Law New Law Difference
Taxable Wages $76,000 $76,000 $0
Less Alimony ($20,000) ($0) ($20,000)
Adjusted Gross Income $56,000 $76,000 $20,000
Standard Deduction ($9,550) ($18,000) $8,450
Personal Exemptions ($8,300) $0 ($8,300)
Taxable Income $38,150 $58,000 $19,850
Tax $5,043 $7,308 $2,265
Education Credit ($2,500) ($2,500) ($0)
Child Tax Credit ($0) ($500) $500
Tax Due (Refund) $2,543 $4,308 $1,765
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