HERE’S a list of tax provisions of the Tax Cut and Jobs Act affecting individuals like you and me.
1. The new Tax Cut and Jobs Act keeps seven tax brackets with six of them at lower rates. Most of us will benefit from the new rates, even if the press says the opposite.
2. The new law doubles the standard deduction amounts starting in 2018 (for the 2019 filing season).
• $12,000 for singles (up from $6,350 for 2017).
• $18,000 for heads of households (up from $9,350).
• $24,000 for joint-filing married couples (up from $12,700).
3. Additional standard deduction amounts for the elderly and blind are still allowed.
4. Personal and dependent exemption deductions are eliminated – gone. This will hurt families with many dependents. Ouch!
5. The Act limits interest deductions on home mortgage debt to acquire a first or second residence from $1 million ($500,000 for married filing separately) to $750,000 ($375,000 for married filing separately).
6. The Act limits deductions for state and local taxes and property taxes to a combined total of $10,000 ($5,000 for married filing separately). Foreign real property taxes can no longer be deducted.
7. The Act expands medical expense deduction for 2017 and 2018 by using prior threshold of 7.5 percent of adjusted gross income (AGI) instead of 10 percent of AGI.
8. Existing education tax breaks are preserved.
9. There’s no change in home sale gain exclusion rules. The new law preserves the valuable break that allows you to exclude $250,000 of gain from a qualified home sale ($500,000 for joint filers).
10. Taxation of capital gains remain at the existing tax rates of 0 percent, 15 percent and 20 percent on long-term capital gains and dividends.
11. Unfortunately, the new law retains the unpopular Individual Alternative Minimum Tax (AMT).
12. The maximum child credit is increased from $1,000 to $2,000 per qualifying child. Up to $1,400 is refundable.
13. The Act creates a new $500 nonrefundable credit for qualified non-child dependents such as children over age 17, elderly parents, or adult children with a disability.
14. Moving expenses are eliminated. Sorry.
15. Most miscellaneous itemized expenses (unreimbursed auto, tax preparation fees) are eliminated.
16. Itemized deductions for personal casualty and theft losses are eliminated (except for personal casualty losses incurred in federally-declared disasters).
17. You will be unable to deduct alimony payments after 12/31/18 (sad), but don’t worry; you will have a happy ex who does not have to pay tax on alimony received from you. Ouch!
18. Tax breaks for adoption expenses are preserved.
19. The tax credit for qualified plug-in electric vehicles is preserved.
20. The unified federal gift and estate tax exemption doubles to $11.2 million ($22.4 million for married couples).
Note: Check effective dates with your tax pro. Most of these new provisions affect your 2018 tax returns that will be filed in 2019.
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Victor Santos Sy graduated Cum Laude from UE with a BBA and from Indiana State University with an MBA. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation in Pasadena, California.
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He has 50 years of experience in defending taxpayers audited by the IRS, FTB, EDD, BOE and other governmental agencies. He is publishing a book on his expertise – “HOW TO AVOID OR SURVIVE IRS AUDITS.” Our readers may inquire about the book or email tax questions at [email protected].