Notes on the New Tax Bill
Some Important Points About the New Tax Bill
1 – These notes only apply to personal income taxes, not a Schedule C.
2 - The only retroactive provision is that the medical expense subtraction, which had been 10% for 2017, is reduced to 7.5% for all taxpayers for 2017.
3 – Everything else in the tax bill starts in 2018.
4 – The maximum allowed for all state and local taxes is $10,000. This includes state withholding tax, state estimated tax, sales tax, and local property and school taxes. The maximum amount is $10,000 for all of them together.
5 – Mortgage interest is allowed on the first $750,000 of mortgage principal. This probably does not affect too many people in the mid-Hudson Valley. BUT-
6 – Home equity loan interest will not be deductible at all, even if that is the only debt on the house.
7 – Standard vs. Itemized Deductions. If your itemized deductions, including the limited $10,000 for state and local taxes, is less than $24,000 married filing jointly or $12,000 single, you will use the standard deduction.
8 – This standard deduction amount now includes personal and dependent exemption amounts. Through 2017, each exemption qualified for a $4,050 deduction from income. This now will go to zero, and be included in the increased standard deduction.
9 – Most Miscellaneous Itemized Deductions are gone.
Employee business expenses, tools, telephone, mileage, travel and entertainment, are no longer deductible:
Union dues, job education, moving expense are no longer deductible.
Financial management fees/investment fees are no longer deductible:
10 – Alimony payments made pursuant to a divorce or separation agreement entered into after 12/31/18 will no longer be deductible by the payer, and will not be income to the recipient. Nothing will change with already-agreed divorce or separation payments.