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
In the new tax law, there’s no going back (on Roth Conversions). As a result of the new legislation, taxpayers are no longer able to “recharacterize”, or undo, a previously executed Roth conversion. Roth conversions allow for an individual to convert some, or all, of an Individual Retirement Account (IRA) into a Roth IRA, subjecting … Continued
The Qualified Charitable Distribution (QCD) remains permanent. Qualified Charitable Distributions (QCD) were made permanent by the Protecting Americans from Tax Hikes (PATH) Act of 2015 and were untouched by this new tax overhaul. IRA owners age 70½ or older can distribute up to $100,000 per year from their IRA directly to charitable organizations. These distributions … Continued
529 plans can now be used to fund up to $10,000 of private school tuition per year. 529 plans are funded with after-tax dollars, but then all income and gains are sheltered within the plan over time, and withdrawals are free of both federal and state tax as long as the proceeds are used for … Continued
Funds within 529 accounts can be transferred to 529 ABLE accounts for people who become blind or disabled before age 26. 529 ABLE accounts are available to those who become blind or disabled before age 26. Importantly, having assets in a 529 ABLE account does not limit the person’s access to key government benefits such … Continued