2017 Tax Law Impacts

Now that we are into 2019, it is time to consider how the Tax Cuts and Jobs Act (TCJA) that was signed in in December of 2017 will affect us. This law is bringing several changes that will mostly affecting individuals from 2018-2025, please read on to learn about these changes.

Standard & Itemized Deductions

The new standard deductions put into effect by this law are: $12,000 for individuals and $24,000 for MFJ. If you itemized in the past, it might be different this year. The only way you can itemize is if your deductions are more than the new standard deduction.

Charitable Deductions

The limits for contributions to public charities have increased to 60% of AGI, but will only count if you choose to itemize.

State and Local Tax Deduction

The itemized deduction has been limited to a maximum of $10,000. This could be a large impact to those who live in high tax states. This deduction is either your property tax plus state and local income tax, or your property tax plus sales tax. The property taxes on certain places, such as residential rental property, are still deductible for 2018.

Mortgage & Home Equity Deductions

If you gained mortgage debt after December 16th, 2017 then you may deduct the interest on up to $750,000. But if you closed on a mortgage loan before that date then you can deduct on up to $1,000,000. Home equity loan interested deductions have been suspended unless you use the money to significantly improve the home and the total debt does not exceed its cost.

Medical & Dental Deductions

You can claim these as itemized deductions as long as they are more than 7.5% of your AGI.

If you have any questions regarding these changes, you may want to contact your tax preparer in order to be ready for what changes you could see on your 2018 Return.

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