TAX REFORM

 

In regard to Alternative Minimum Tax, it is here to stay, however threshold has increased significantly (from $84,500 to $109,400 for married and from $54,300 to $70,300 for single) so fewer households will be effected by it.

The child tax creditdoubles to $2,000 from $1,000, also with a higher phase-out, so most will benefit from change, although you lose personal exemption deduction.

New homeowners can include mortgage interestup to $750k down from $1m and you also loose moving expense deductions.Property taxes are now combined with state incometaxes and limited to $10,000 combined deductions. This will affect many in higher property tax states, New Jersey, New York, Connecticut, Massachusetts, California, etc.

In-frequent line item changes:

Home sale gains exclusion now requires you own the home as a primary residence for five years up from 3 to exclude $250k single/$500k married.

Pass-Through Business (Schedule C) can deduct up to 20% of income.

Personal casualty or theft is only deductible in federally declared disaster situations. Still needs to exceed 10% of your adjusted gross income (AGI).

Tax deductions that won’t change:

Teacher deductionof $250 for unreimbursed expenses.

Electric car tax credit

Adoption expense up to $13,570

Student Loan Interest deduction of $2,500

 

NEW NEW

From https://www.irs.gov/forms-pubs/about-form-1040 the new forms accompanying the new Form 1040 are as follows:

A general guide to what Schedule(s) you will need to file. (See the instructions for the Schedules for more information.)

IF YOU...

Have additional income, such as capital gains, unemployment compensation, prize or award money, gambling winnings. Have any deductions to claim, such as student loan interest deduction, self-employment tax, educator expenses.

THEN USE

Schedule 1

IF YOU...

Owe AMT or need to make an excess advance premium tax credit repayment.

THEN USE

Schedule 2

IF YOU...

Can claim a nonrefundable credit other than the child tax credit or the credit for other dependents, such as the foreign tax credit, education credits, general business credit.

THEN USE

Schedule 3

IF YOU...

Owe other taxes, such as self-employment tax, household employment taxes, additional tax on IRAs or other qualified retirement plans and tax-favored accounts.

THEN USE

Schedule 4

IF YOU...

Can claim a refundable credit other than the earned income credit, American opportunity credit, or additional child tax credit. Have other payments, such as an amount paid with a request for an extension to file or excess social security tax withheld.

THEN USE

Schedule 5

IF YOU...

Have a foreign address or a third party designee other than your paid preparer.

THEN USE

Schedule 6