20 things to know about the new tax laws
1. 2017 Taxes: The new laws will apply to 2018 taxes.
2. Property Taxes: The maximum total that can be written off is $10,000 for the combination of property taxes + income and sales taxes.
3. Mortgage Interest Cancellation – The deduction has been reduced, 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 singles and $500,000 for married couples. You must have lived in the property for two of the last five years as your primary residence.
5. Standard Deduction – This deduction has almost doubled.
· Single Filers: The new standard deduction has increased to $12,000.
· Married Joint Filers: The new standard deduction has increased to $24,000.
6. Investor Business Assets: Business assets purchased new or used after September 9, 2017, such as equipment, furniture, fixtures, appliances, computers, etc. for real estate activities, they have an additional depreciation deduction of 100% as immediate cancellation of the expense. instead of having to depreciate it over time.
7. Business Entertainment: These expenses are no longer tax deductible.
8. Estate Tax: Estate Tax applies to the transfer of property after someone dies. The amount exempt from the tax has doubled from $5.49 million for individuals and $10.98 million for married couples.
9. Health Insurance: The penalty for not having health insurance is eliminated. The Congressional Budget Office predicted that as a result, 13 million fewer people will have insurance coverage by 2027 and premiums will increase by about 10% most years.
10. Personal Exemption: This deduction no longer exists. Previously, you could claim a personal exemption of $4,050 for: yourself; your spouse and each of your dependents, which would reduce your taxable income.
11. The Child Tax Credit: This credit has been increased to $2,000 for children under 17 years of age. The full credit can now be claimed by a single parent making up to $200,000 and married couples making up to $400,000.
12. Non-Child Dependents: This may apply to a number of adult persons, such as children over the age of 17, elderly parents, or adult children with a disability for a temporary credit of $500.
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 who writes the checks cannot deduct their alimony payments if the Divorce or Separation process is dated after 12/31/2018.
15. Student Loan Interest:
The $2,500 annual deduction for student loan interest will continue.
16. 529 Savings Accounts: These qualified tuition plans are not taxable, but previously they could only be used for college expenses. Now $10,000 can be distributed annually to cover the cost of sending a child to a Public, Private or Religious elementary or secondary school.
17. Deficit: The net figure calculated by the nonpartisan Joint Committee on Taxation estimates that Tax Reform will likely increase deficits by $1.46 trillion over the next decade.
18. Corporate Tax: Its rate is reduced to 21% from the previous 35%. The alternative minimum tax for corporations has also been scrapped.
19. Deduction for Tax Preparation: The deduction for having your taxes prepared by a professional or by accounting software is eliminated.
20. Fewer local accountants: The increase in standard deductions will likely result in more people preparing their own personal tax returns.
On the campaign trail, Trump has said, “I want to shut down H&R Block.” Over time there will likely be fewer local professional accountants along with their councils, the community will likely suffer this loss.
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