That pesky AMT survives the new tax legislation but will impact far fewer tax payers. Alternative minimum tax (AMT), the tax application to limit tax breaks, was on the chopping block but ultimately survived. Complex and unpredictable, the AMT ceiling was substantially raised. The good news for most current AMT payers is that they may … Continued
This tax has been reduced or eliminated for many married couples. The confusing and complicated tax code of the IRS as it relates to married taxpayers filing jointly seems to be saying, “Don’t get married – it’ll cost you.” A marriage penalty or bonus is the change in a couple’s total tax bill occurring as … Continued
Phew! Nothing is changing, despite an initial effort to reduce the benefit. Good news for homeowners! The effort to reduce the home seller’s exemption was unsuccessful so the current limits remain unchanged. This means that married couples filing jointly can continue to exclude $500,000 of profit on the sale of their primary residence. Single filers … Continued
One of the biggest changes occurred here, with the taxable estate exemption doubled. The number of estates predicted to owe tax in 2018 versus 2017 may be cut in half thanks to the change in the estate and gift tax exemption amount. The new limit, which applies to gifts made during life or assets left … Continued
The deduction for state and local taxes (SALT) is capped at $10,000 per return. Prior to the Tax Cuts and Jobs Act of 2017, a taxpayer choosing to itemize their deductions had the ability to claim unlimited deductions for their state, local, and property taxes. Beginning in 2018 under the new laws, regardless of the … Continued
Charitable contributions not only retained their deductibility but were expanded upon. The percentage limit for charitable donations of cash to a public charity has been increased to 60% from 50% of your adjusted gross income (AGI). However, given the rise in the standard deduction to $12,000 for individuals and $24,000 for couples filing jointly, many … Continued
A cap on eligible deductions mean fewer will take this popular write off. The new law reduces the amount of indebtedness on which taxpayers can deduct mortgage interest. It used to be that one could deduct the interest on mortgage loans up to $1 million, plus the additional interest on up to $100,000 of any … Continued
Future alimony negotiations become more challenging. Previously, alimony was treated as taxable income to the recipient and therefore tax deductible to the payer. Beginning in 2019 under the new Act, alimony is no longer a tax-deductible item on the federal tax return. Therefore, the recipient will no longer be required to pay income tax and … Continued
Medical deductions are retained and enhanced. Taxpayers who itemized their deductions prior to the Tax Cuts and Jobs Act of 2017 had the ability to deduct their out-of-pocket medical expenses that exceeded the amount equal to 10% of their adjusted gross income (AGI). The deduction applied to qualified costs on expenses for diagnosis, cure, mitigation, … Continued
Many small write-offs have lost their deductibility although under previous AMT laws, their benefits were phased out anyway. Previously, individual taxpayers who itemized their deductions rather than claiming the standard deduction have enjoyed the ability to deduct miscellaneous expenses that, when combined, exceeded 2% of their adjusted gross income (AGI). This unassuming catch-all category covered … Continued