Essential Tax Advice
At Danile & Danile of Somerset, New Jersey and Leland, North Carolina we keep you informed about tax and financial news that can save you money. Keep an eye on this page for the latest tips and tax news.
Except for a few provisions, all of the changes included in the recently passed Tax Cuts and Jobs Act go into effect beginning in 2018 and beyond. Three provisions are applicable for the 2017 federal returns:
- The adjusted gross income threshold for medical expenses on Schedule A will be 7.5% for all taxpayers for 2017 and 2018.
- 100% of bonus depreciation is eligible for qualifying assets purchased after September 27, 2017.
- The home mortgage interest deduction is limited to no more than $750,000 of principal residence acquisition indebtedness for loans incurred beginning after December 14, 2017. The limit is $1,000,000 for loans incurred before December 15, 2017.
Changes for individuals in 2018:
- For tax years 2018 through 2025 individual tax rates have changed. There will be 7 brackets. They are 10%, 12%, 22%, 24%, 32%, 35% and 37%.
- The standard deduction has been increased through 2025 to $24,000 for married taxpayers filing jointly, $18,000 for heads of household, and $12,000 for all other individuals. The additional deduction for elderly and blind taxpayers was not changed.
- Personal exemptions were repealed through 2025 due to the increase in the standard deduction amounts.
- The child tax credit was increased to $2,000 per qualifying child. The maximum refundable amount of the credit is $1,400. The Act creates a new nonrefundable $500 credit for qualifying dependents who are not qualifying children. Phaseouts do exist.
- Home equity loan interest deduction was repealed through 2025.
- State and local income or sales and property tax deductions are limited to $10,000 ($5,000 for married taxpayers filing separately).
- The miscellaneous itemized deductions subject to the 2% floor have been repealed through 2025.
- For any divorce or separation agreement executed after Dec. 31, 2018, you will no longer be allowed to deduct the alimony paid and recipient need not include it on their tax return.
- The moving expense deduction has been repealed through 2025, except for members of the armed forces on active duty.
- Educators can still deduct $250 above the line for expenses incurred for professional development or to purchase classroom materials.
- The AGI limit for gifts of cash made to public charities rises to 60%, up from 50%.
- Personal casualty losses will only be deductible for federally declared disaster areas.
- The individual AMT (Alternative Minimum Tax) was not repealed; however, the exemption was increased. The amount increases to $109,000 for married taxpayers filing jointly and $70,300 for all other taxpayers. Phase-out thresholds exist. Both the exemption and threshold amounts will be indexed for inflation.
- The individual mandate penalty on those individuals with no health insurance was reduced to zero. This provision is effective after 2018.
2018 Changes for Estate & Trusts:
- Estates & Trusts will be taxed at 10%, 24%, 35% and 37%.
- For estates, gift and generation – skipping transfer taxes the basic exclusion increased from $5 Million to $10 Million and will be indexed for inflation.
2018 Changes for Small Business:
- Individual taxpayers may deduct 20% of domestic qualified business income from a partnership, S Corporation or Sole Proprietorship.
- Limitations and phase-outs apply so call us to provide professional assistance in your individual and business tax needs.
- Go online to access any tax documents that you may not receive in the mail. Your broker, bank and mortgage institution should provide you with a year-end statement containing all relevant information for completing your tax return.
- Be aware of scams from people claiming to be from the IRS or working for the IRS, either by telephone or email and call us immediately. The IRS will never contact you by email or telephone.
Contact us at (732) 247-2960 for both Somerset, New Jersey and Leland, North Carolina for tax advice from seasoned professionals.