HAPPY NEW YEAR 2019! WELCOME TO TAX SEASON 2019!
The Tax Cuts and Jobs Act of 2017 has totally changed the tax environment for your 2018 returns. Without going into the gory details that have been smeared all over the media all year, the below is a summary of the changes for the average taxpayer.
- Tax brackets have been made wider and lower. You may save money here regardless of other issues on your return. Our initial projections show savings in almost every case even considering the issues noted below.
- There are no more “dependents” as we previously understood them. You, your children, your mother-in-law etc. no longer create specific deductions on your return. However, they may create tax credits in alternate computations.
- The Standard Deductions have been doubled for the sake of simplicity, so many of you (more than you may believe) will no longer be itemizing deductions. So, this may be the last year you have to keep receipts for the Salvation Army, Walgreens etc.
- Your mortgage interest and real estate taxes may be affected by new limitations. Tax deductions such as, income, sales and real estate are limited in total to $ 10,000. New mortgages are limited above $ 750,000, and Equity Lines may lose their deductions all together.
- There are no more Miscellaneous Itemized Deductions. Legal Fees, Tax prep, Union Dues, Investment Fees are now non-deductible. More importantly to some employees, the Employee Business Deductions for auto, meals, travel, office expenses, etc. (Home office) is gone totally.
- Depreciation for business assets on Schedule C and rental assets on Schedule E may be 100% deductible starting in late 2017, so there is potential for large tax savings there for many of you.
- The “Kiddie Tax” rules have changed, so the investment income earned by your children may no longer be taxed at your rates. Incomes above $ 2,100 will be subject to tax rates paid by Trusts, which is generally higher than individuals. However capital gains and qualified dividends may be taxed at zero up to $ 2,600. Of course, there are exceptions and other tax computations depending on their age and W2 incomes.
- The Obamacare penalties are STILL in place for 2018, for not having health insurance. As of now (in 2019) that is totally gone.
So, in summary, please review your information provided to us, as it may be different than in past years. If you received a tax organizer, please review it for changes to phone numbers, email addresses etc. to keep our contacts fresh.
We encourage EARLY and electronic submission of your data in lieu of a pile of paper that can be misplaced or lost during the insanity here from March 1st to the end of April.
If you have a PIN number due to a past identity theft issue, please be sure to include that. We haven’t experienced any NEW identity thefts issues in the past few years, which is good news for everyone.
The Boca Accounting Team