New Tax Laws
THE NEW TAX REFORM LAWS effective January 1, 2018
STANDARDDEDUCTIONS nearly double to $24,000 for taxpayers filing Married Filing Joint, $12,000 for taxpayers filing Single and $18,000 for taxpayers filing Head Of Household.
PERSONAL EXEMPTIONS for individual filers and their dependents are gone. In 2017, personal exemptions were $4050.00 for each person claimed on the return. Starting in 2018, we will no longer have the personal exemptions to help reduce our tax liabilities.
HOME MORTGAGE INTEREST can be deducted on up to $750,000 for new loans on a primary or secondary residence…. Down from $1 million. The new $750,000 limit applies to mortgage debt incurred after December 14, 2017. Older loans (including refinances) will be grandfathered in and will get the $1 million cap.
Prior to 2018, those taxpayers who have a home loan on a primary or secondary homes that exceed the $1 million were limited in their mortgage interest deduction. Beginning in 2018 for NEW home loans, taxpayers will be limited in their mortgage interest deduction should the loan balance exceed $750,000.
HOME EQUITY LOANS will no longer be a deduction starting in 2018. This law applies to existing and new home equity loans.
STATE, LOCAL and PROPERTY TAX can be deducted up to a $10,000 cap beginning in 2018. These taxes include any combination of residential property taxes, state income taxes, DMV registration fees or sales taxes.
EMPLOYEE BUSINESS EXPENSES, BROKERAGE and IRA FEES and TAX PREPARATION deductions have been eliminated starting in 2018.
This will impact many of our clients in a LARGE way. Any W2 employees with work expenses that are not reimbursed will no longer be able to deduct the expenses on their tax returns.
MOVING EXPENSES will no longer be a deduction starting in 2018 unless you are a member of the Armed Forces on active duty who is required to move pursuant to a military order and incident to a permanent change of station.
MEDICAL EXPENSE deduction has been enhanced. You will be allowed the medical expense deduction if you paid expenses that exceed 7.5% of your income (down from 10%).
CHILD TAX CREDIT is doubled to $2000 for each dependent under age 17, with up to $1,400 of the credit refundable to lower income taxpayers (previously, only $1000 was refundable).
NEW CREDIT for each dependent who is not a qualifying child of $500 (elderly parent you take care of or a disabled adult child). This credit is non-refundable.
ANNUAL GIFT TAX EXCLUSION increases to $15,000 per donee starting in 2018. The exclusion was $14,000 per donee in 2017.
CASUALTY and THEFT LOSS deduction has been suspended, except for personal casualty losses incurred in a Federally declared disaster area.