Skip to main content

THURSDAY TAX TIDBITS

How does Trump's new tax law affect you?
Under the Trump Administration, there have been many changes made. Read through this brief article on how it may impact you; if you come across any confusion or questions, do not hesitate to reach out!
The Act eliminates most itemized deductionsThat includes moving expenses, except for members of the military. Those paying alimony can no longer deduct it, while those receiving it can. This change begins in 2019 for divorces signed in 2018. It keeps deductions for charitable contributions, retirement savings, and student loan interestThe Act limits the deduction on mortgage interest to the first $750,000 of the loan. Interest on home equity lines of credit can no longer be deducted. Current mortgage holders aren't affected. 
Taxpayers can deduct up to $10,000 in state and local taxes. They must choose between property taxes and income or sales taxes. This will harm taxpayers in high-tax states like New York and California.
The Act expands the deduction for medical expenses for 2017 and 2018It allows taxpayers to deduct medical expenses that are 7.5 percent or more of income. Before the bill, the cutoff was 10 percent for those born after 1952. Seniors already had the 7.5 percent cutoff.  At least 8.8 million people used the deduction in 2015. 
The Act repeals the Obamacare tax on those without health insurance in 2019. Without the mandate, the Congressional Budget Office estimates 13 million people would drop their plans. The government would save $338 billion by not having to pay their subsidies. But health care costs would rise because fewer people would get the preventive care needed to avoid expensive emergency room visits. Health insurance companies would losing money. Healthier people would drop coverage, leaving insurance firms with a higher proportion of sick enrollees.
Senator Susan Collins, R-Maine, approved the bill only because Trump promised to reinstate subsidies to insurers as outlined in the Murray-Alexander bill. The $7 billion in subsidies reimburse them for lowering costs for low-income Americans. But the CBO said it won't offset the higher health care prices created by the mandate repeal.
The Act doubles the estate tax exemption to $11.2 million for singles and $22.4 million for couples. That helps the top 1 percent of the population who pay it. These top 4,918 tax returns contribute $17 billion in taxes. The exemption reverts to pre-Act levels in 2026.
It keeps the Alternative Minimum Tax. It increases the exemption from $54,300 to $70,300 for singles and from $84,500 to $109,400 for joint. The exemptions phase out at $500,000 for singles and $1 million for joint. The exemption reverts to pre-Act levels in 2026.  
Child and Elder Care 
The Act increases the Child Tax Credit from $1,000 to $2,000. Even parents who don't earn enough to pay taxes can claim the credit up to $1,400. It increases the income level from $110,000 to $400,000 for married tax filers.  
It allows parents to use 529 savings plans for tuition at private and religious K-12 schools. They can also use the funds for expenses for home-schooled students.
It allows a $500 credit for each non-child dependent. The credit helps families caring for elderly parents.
Follow me!
Twitter: @thetaxlady4u
And ask me about PolkaDotPowerhouse!

Comments

Popular posts from this blog

THURSDAY TAX TIDBITS

Tax Law Changes: Meals and Entertainment   Under the Trump Administration, the new tax Act creates stricter limits on the deductibility of business meals and entertainment expenses. As a business owner, you can still deduct your meals, but no longer entertainment. For example, if you take your team to a baseball game, you can write-off the hot dog, but not the game. Entertainment expenses incurred or paid after December 31, 2017 are nondeductible unless they fall under the specific exceptions in Code Section 274(e). One of those exceptions is for “expenses for recreation, social, or similar activities primarily for the benefit of the taxpayer’s employees, other than highly compensated employees”. (i.e. office holiday parties are still deductible). Business meals provided for the convenience of the employer are now only 50% deductible whereas before the Act they were fully deductible. After 2025, those meals will be nondeductible. These new rules should be kept in ...

THURSDAY TAX TIDBITS

Five Facts the IRS doesn't want you to know! 1. Calling the IRS for help won't work. Calling the IRS usually requires you to stay on hold. Last year, 35.6% of phone calls went unanswered by representatives; that's a lot! Additionally, this year the IRS projects that they will only serve 43 percent of callers after they wait for 30 minutes. Crazy, I know! 2. The IRS can't handle all the paperwork either. About 50 percent of letters the IRS receives have not been handled in a timely manner. The IRS deals with over a million pieces of correspondence; it takes an average of 45 days to respond. 3. The IRS is worried about ObamaCare collection. If you received a subsidy based on your projected income, and you made more than that estimate, you may have to pay back part of the subsidy. If you did not have a health care plan, you may be able to file for an exemption or you could owe a small penalty. The Trump administration ended this policy, however, it i...

THURSDAY TAX TIDBITS

What is the Dark Web? As a tax accountant, I see and witness many clients falling victim to identity theft. Because of this, I make it my responsibility to bring awareness to the issue as much as I can. Recently, I came across an AARP article discussing what the Dark Web is. I found the article to be interesting and believe it is something of value to my blog readers. The intelligence and skill behind hacking are so advanced with today's technology; it is scary and difficult to know how to protect yourself from it. I encourage you to read AARP's article and share with friends and family. For more questions, our accountants at Cunningham Tax Help have the resources that can help you and your situation.  We are open Monday through Friday from 9 AM to 5 PM; contact us by email or phone at: thetaxlady4u@gmail.com or 253.581.1461 AARP Article:  https://www.aarp.org/money/scams-fraud/info-2018/what-is-the-dark-web.html Follow me! Twitter:...