A new year – a new federal tax law!January 19, 2018
While the majority of the provisions have no impact on your 2017 income tax returns, several things do require your immediate attention.
The Medical Expense Deduction was threatened but was saved! In fact, for 2017 and 2018 tax years, the threshold is reduced from 10% AGI to 7.5% AGI. AGI stands for Adjusted Gross Income. This will allow more taxpayers to qualify for the deduction.
The rules for deducting interest paid on home loans are changing drastically. Starting for 2018, home equity loan interest is no longer deductible. The rules apply to existing debt so interest you are deducting on your 2017 return will not be deductible on your 2018 return. There is also a cap on the maximum amount of debt on which the interest is deductible. Under the new law, only debt incurred to acquire the property is eligible.
The Standard Deduction is increased but the Personal Exemption is eliminated. The elimination of the personal exemption will impact those claiming dependents on their returns.
Starting in 2018, the deduction for state and local taxes (i.e., property and income) is limited to $10,000.
Bad news for Penn State and other college fans, the seat licensing fees paid to secure your right to purchase tickets or seating at athletic events can no longer be taken as a charitable contribution.
Good news for 529 Plans. Starting in 2018, up to $10,000 per beneficiary can be used for elementary and secondary school tuition. It applies to public, private and religious schools.
The Tax Cut and Jobs Act is a complex piece of legislation that was supposed to simplify the tax law. Many of the provisions are directed to corporate taxpayers. The regulations will answer many questions. Most likely there will be “technical corrections” made as the impact is felt across the nation.
If you have specific concerns or questions, the attorneys at Daley Zucker can assist you. We are happy to do so in consultation with your existing tax advisor.