Tax Updates

Here are the latest updates to your 2018 (next year) taxes.

Tax Law Changes Beginning 1-1-2018

No deduction allowed for:

Investment Management and Consulting fees

Tax preparation fees

Unreimbursed employee expenses

Hobby expenses

        Theft losses

Existing or new home equity mortgage interest if not spent on first or second home

Charitable gifts are preserved with some caveats

Moving expenses related to job change (Except for active members of the military)

Employer-subsidized parking and transportation reimbursement

Alimony for post-2018 divorce decrees. Recipients will not be taxed.

Other limits

Mortgage interest limits:

Paid on mortgages of up to $1 million made prior to 12/15/17: Deductible

Paid only on mortgages of up to $750,000 made after 12/15/17: Deductible

State/Local/Property/Real Estate taxes: Limited to an aggregate total of $10,000

Cash contributions to public charities: 60% of AGI after 1/ 31/17 and before 1/1/26 (was 50%)

Standard deduction: Married filing jointly – $24,000, Single – $12,000, Head-Of-Household – $18,000

Taxpayers 65 and over or blind get an additional $1,300 – $1,600 if unmarried.

Personal exemption amount for filers and dependents is no longer effective with 2018

Medical expense deduction:

2017 and 2018: Must exceed 7.5% of AGI

2019 through 2025: Must exceed 10% of AGI

Child tax credit:

Increased to $2,000 for dependent children under age 17

Income limits for this credit: $400,000 (Married filing jointly), $200,000 (Single filers)

Taxpayers with no tax liability: The credit limit is $1,400

529 account holders can allow up to $10,000 for tuition for elementary and secondary education

Annual gift exclusion: Increased to $15,000 per person per donor

Lifetime estate tax exemption: $11.2 million (Individuals), $22.4 million (Married couples)

There’s a new $500 credit for each new dependent who is not a qualifying child (Ex: elderly parent,

disabled adult child)

 

Alternative Minimum Tax or “AMT”

The alternative minimum tax was enacted to make sure individuals pay a minimum amount of tax, regardless of the amount of deductions taken on their return. Before the new tax bill, many taxpayers were subject to the AMT due to the add-back of certain itemized deductions, such as state and local taxes and miscellaneous itemized deductions. However, beginning in 2018, with the elimination of miscellaneous itemized deductions and state tax deductions capped at $10,000, many taxpayers who previously paid the AMT will no longer be subject to it.

Other changes to the AMT rules will also decrease the number of taxpayers who have to pay it. Beginning in 2018, the amount that you can subtract from your AMT income (i.e. exemption amount) increases significantly from $84,500 to $109,400 (married filing jointly) and from $54,300 to $70,300 (single taxpayers). The new tax bill also increases the phase-out of the exemption to $1 million for married taxpayers filing jointly and $500,000 for single taxpayers. The result of these new AMT rules will significantly decrease the number of individuals required to pay AMT tax beginning in 2018.

 

Tax Law Changes Beginning 1-1-2019

Penalty for not having adequate medical insurance coverage: $0.00 The individual mandate for each adult to have adequate medical coverage is still in effect for calendar year 2018 however.

(more later as it becomes available)

NOTE: Most all of the above new changes have exceptions and “gotchas.” This web site is not the final authority on the above and I cannot be held liable for any misstatements or even out and out errors on my part. Each individual taxpayer’s circumstances may change the application of tax laws finalized for the 2018 tax filing season beginning January 2018.