Spring 2018 issue of Horizons

INDUSTRY UPDATE LAW FIRMS

New Tax Law Highlights: The Impact on Law Firms and Their Partners by Kristin Bettorf, CPA

T here is no doubt that the new tax law includes substantial changes to the taxation of individuals, businesses, estates and nonprofit organizations. The following are some of the highlights of the changes to the individual tax law that will impact law firms and their partners. Standard Deductions and Personal Exemptions The personal exemption deduction is disallowed and replaced with a higher standard deduction.

The standard deduction increased to $12,000 for single filers and $24,000 for joint filers, which is nearly double the 2017 amounts.

Child Tax Credit The child tax credit is increased to $2,000 per qualifying child (from $1,000 under the prior law), and the adjusted gross income (AGI) phase-out threshold has been raised. The credits start to phase out at $400,000 of AGI for married filing jointly and $200,000 of AGI for any other filing status.

Spring 2018

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