The Tax Laws have quite a few recent changes, here are 20 thing you should know.
1. 2017 Taxes: The new laws will be applied to 2018 taxes.
2. Property taxes: The max total that can be written off is $10,000 for the combination of property taxes + income & sales tax
3. Mortgage Interest Write-Off: The deduction has been lowered, now you can only deduct the first $750,000 of your mortgage interest.
Home Equity Line mortgage interest will no longer be tax deductible on a primary residence unless the funds are used for renovations.
4. Capital Gains: This exclusion will remain the same at $250,000 for single & $500,000 for married couples. You have to live in the property for two of the last five years as your primary residence
5. Standard Deduction: this deduction has nearly doubled.
• Single Filers: the new standard deduction has risen to $12,000.
• Married Joint Filers: the new standard deduction has risen to $24,000.
6. Investor Business Assets: Business assets purchased new or used after September 9th 2017 such as equipment, furniture, fixtures, appliances, computer and so on for real estate activities have a 100% bonus depreciation deduction as an immediate write-off of the expense rather then having to depreciate it over time.
7. Business entertainment: These expenses are no longer tax deductible.
8. Estate Tax: The Estate Tax is applied to the transfer of property after someone dies. The amount exempt from the tax has been doubled from the $5.49M for individuals & $10.98M for married couples
9. Health Insurance: The penalization for not having health insurance has been eliminated. The Congressional Budget Office has predicted that as a result, 13 million fewer people will have insurance coverage by 2027, and premiums will go up by about 10% most years.
10. Personal Exemption: This deduction is now gone. Previously you could claim a personal exemption of $4,050 for: yourself; your spouse and each of your dependents which would lower your taxable income.
11. The Child Tax Credit: This credit has been increased to $2,000 for children under 17. The entire credit can now be claimed by a single parent who makes up to $200,000 & married couples who make up to $400,000.
12. Non-Child Dependents: This can apply to a number of people adults support, such as children over age 17, elderly parents or adult children with a disability for a $500 temporary credit.
13. Medical Expenses: You can deduct medical expenses that add up to more than 7.5% of your adjusted gross income.
14. Alimony Payments: The person that writes the checks cannot deduct their alimony payments if the Divorce or Separation paperwork is dated after 12/31/2018
15. Student loan interest:
The $2,500 annual deduction for student loan interest will remain.
16. 529 Savings Accounts: These qualified tuition plans aren’t taxed but could previously only be used towards college expenses. Now annually $10,000 can be distributed to cover the cost of sending a child to a Public, Private or Religious elementary or secondary school.
17. Deficit: The net number crunched by the nonpartisan Joint Committee on Taxation estimate that the Tax Reform will likely increase deficits by $1.46 trillion over the next decade.
18. Corporate Tax: Their rate is coming down to 21% from the previous 35%. The alternative minimum tax for corporations has been thrown out as well.
19. Tax Preparation Deduction: The deduction for having your taxes prepared by a professional or for accounting software has been eliminated.
20. Fewer Local Accountants: The increase of Standard Deductions will likely result in more people preparing their own personal tax returns.
On the campaign trail Trump has said "I want to put H&R Block out of business". Over time there will likely be less local professional accountants along with their advice, the community will likely suffer from this loss.