Here are some of the major changes you might see when filing your 2018 taxes:
Standard deduction changes
Standard deductions have increased across the board. Single taxpayers and married filing separately tax payers used to get a standard deduction of $6,500. This deduction is now $12,000. For head of household filers, the standard deduction is now $18,000 as opposed to $9,550. Married couples filing taxes jointly used to get a standard deduction of $13,000, but that deduction will now be $24,000.
Child Tax Credit
Prior to 2018 parents used to be able to claim a child tax credit of $1,000 per qualifying child. But now, parents of children under the age of 17 will get a credit of $2,000 per qualifying child. There is also going to be a $500 credit available for parents who have dependents that don’t meet the qualifications for the $2,000 credit.
Mortgage Interest Deduction has decreased
Homeowners used to be able to get a mortgage interest deduction for interest paid on mortgages with up to $1 million in acquisition debt; this is now capped at $750,000 in acquisition debt
Retirement Contributions
If you participate in specific retirement plans through your employer, such as a 401(k), a 403(b), or a 457 plan, you’re now eligible to contribute up to $18,500 in 2018. That’s up from $18,000 in previous years.
Miscellaneous Itemized deductions
The new law suspends “all miscellaneous itemized deductions that are subject to the two-percent floor under present law.” These include investment expenses, unreimbursed employee business expenses, and tax compliance fees for non-business taxpayers.
Section 1031 Like-Kind Exchanges Restricted to Real Property
The new law limits Section 1031 like-kind exchanges to real property, not for sale. Investors may no longer use Section 1031 to defer income recognition on exchanges in artwork, collectibles, and other tangible and intangible property (such as cryptocurrency).
State and Local Taxes Capped at $10,000 Per Year
The TCJA capped the State and Local Tax itemized deduction to $10,000 per year. The Act allows any combination of state and local income, sales or domestic property tax. SALT may not include foreign real property taxes.
Unreimbursed Employee Expenses
The Act suspends unreimbursed employee business expenses deducted on Form 2106.
Tax Prep and Planning Fees
Miscellaneous itemized deductions include tax planning, preparation, and consultation fees. If you operate a business, the business portion is allowed as a business expense.
Gambling Loss Limitations
The Act added professional gambling expenses to gambling losses in applying the limit against gambling winnings. Professional gamblers may no longer deduct expenses more than net winnings
Charitable Contribution Deduction Limitation
The Act raised the 50% limitation for cash contributions to public charities, and certain private foundations to 60%. Excess contributions can be carried forward for five years.
Alimony Deduction
The Act suspends alimony deductions for divorce or separation agreements executed in 2019, and the recipient does not have taxable income.
Moving Expenses
The Act suspends the AGI deduction for moving expenses, and employees may no longer exclude moving expense reimbursements, either. “Except for members of the Armed Forces on active duty who move pursuant to a military order and incident to a permanent change of station.”
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