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New Tax Law Changes

The recently enacted TCJA is a sweeping federal tax package.  The complete list of tax revisions is numerous; below is a highlight of selected items that could affect many of our clients.

  • Standard Deduction Rates:

Married Filing Joint:$24,000, Head of Household:$18,000, Single/MFS:$12,000.

 

  • Personal Exemptions:

Have been suspended.

 

  • Child Tax Credit:

Credit increases to $2000 for every qualifying child.Maximum of $1400 is refundable.Taxpayers are able to claim non-child dependent and receive a $500 non-refundable credit.Qualifying child must be under 17 at year end.

 

  • Moving Expense/Reimbursements:

Moving expenses are no longer able to be deducted and moving cost reimbursements will need to be claimed as income.

 

  • Alimony:

No longer deductible by payer.In turn it is excludible from gross income of the payee.The provision goes into effect for divorce or separation agreement that is executed after 12/31/18.This does not have an effective ending date.

 

  • ACA Individual Mandate:

Taxpayers will no longer be required to have health insurance or pay a penalty for not having it.This provision begins 1/1/2019.No end date for this change.The mandate still applies for tax year 2018.

 

  • Medical Deduction:

For tax years 2017 and 2018 the AGI floor for unreimbursed medical expenses is lowered to 7.5% for all taxpayers.
 

  • Charitable Contributions:

Donors are no longer allowed a deduction for seating rights for college athletic events.A receipt is required for donations over $250.

 

  • Taxes Paid:

There is a limit of $10,000 on the aggregate of state, local, sales and property taxes. Foreign real state taxes paid will not be allowed to be itemized.

 

  • Mortgage Interest:

The bill no longer allows home equity loan interest also known as Home Equity line of credit (HELOC) to be deducted.Limitation on mortgage amount is reduced to $750,000 or $375,000 for MFS filers.You are grandfathered in if a contract for purchase of main or 2nd residence is executed by 12/15/2017.

 

  • 2% Miscellaneous Deductions:

These are repealed, which means no more form 2106 or other miscellaneous deductions that are subject to the 2% AGI floor.You will no longer able to claim unreimbursed employee expenses.These would include items such as business miles, cell phone, licenses, meals and other costs you pay for personally for your job.Tax prep fees and investment advisory fees are also no longer deductible for individuals.

 

  • Itemized Deduction Limitation:

Has been suspended