Tax Advice From Our 2018 Tax Reform Seminar
Thanks For A Great Trip!
Our Caribbean Tax Seminar was a great success! First, we must thank our three forum sponsors: SunTrust, ADP, and Pinnacle Financial Wealth Management for their support and attendance to this important tax event. From the two hour tax forum, to the cocktail party and everything in between – riding scooters, spear fishing, snorkeling, lying on the beach, shopping, eating great food and trying local brews – the trip was a blast! A big shout out to one couple who even got engaged – congratulations to you two.
Throughout the event it was great to mingle with our clients and get to know them on a more personal level, all while talking business and taxes among the 54 attendees. Thanks again to SunTrust, ADP, and Pinnacle Financial Wealth Management and each person in attendance who helped make this seminar successful.
Tax Forum Recap
At Alron Taxes, Inc. we want each and every one of our clients to be armed with confidence and knowledge going into tax season. That’s why we are happy to provide the following recap of the new tax laws for our clients. We hope this summary is helpful and informative.
Individual Tax Changes
The tax reform nearly doubles standard deductions:
- $24,000 for couples
- $12,000 for singles
- $18,000 for household heads
- Those age 65 or older, and blind individuals get $1,300 more per person ($1,600 if unmarried).
However, it reduces or eliminates many deductions claimed by individuals. Personal exemptions for individual filers and their dependents are repealed, as well as home mortgages.
The popular deduction for state and local taxes is being squeezed. You can deduct any combination of residential property taxes and income or sales taxes up to a $10,000 cap.
Property taxes remain fully deductible for taxpayers in a business or for-profit activity, so taxes paid on rental realty can be taken in full on Schedule E.
Several Other Write-offs Are Eliminated, Including:
- Deductions for job-related moves (except for the military)
- All miscellaneous write-offs subject to the 2%-of-AGI threshold, including employee business expenses, brokerage and IRA fees, hobby expenses and tax return preparation costs
- Theft losses
- Alimony for post-2018 divorce decrees, (recipients will not be taxed on alimony they receive)
- Personal casualty losses (except those in a presidentially declared disaster areas).
The charitable contribution write-off is preserved, however the AGI limitation on cash donations to qualified charities is hiked from 50% to 60%.
The medical expense deduction is enhanced. Not only have lawmakers opted to keep this popular write-off, but they’ve also temporarily lowered the AGI threshold for deducting 2017 and 2018 medical expenses on Schedule A from 10% to 7.5%.
The phase out of itemized deductions is scrapped under the new law.
Investments
Tax rates on long-term capital gains and qualified dividends do not change. Before 2018, the capital gain and dividend rate depended on your tax bracket, but with the new bracket changes, Congress decided to set income thresholds instead.
- The 0% rate will continue to apply for taxpayers with taxable income under $38,600 on single-filed returns and $77,200 on joint returns.
- The 20% rate starts at $425,800 for singles and $479,000 for joint filers.
- The 15% rate applies for filers with incomes between those break points.
- The 3.8% surtax on net investment income remains, kicking in for singles with modified AGI over $200,000, and $250,000 for marrieds.
Minimum Tax
The law keeps the individual alternative minimum tax, but with higher exemptions:
- $109,400 for joint return filers
- $70,300 for singles and household heads.
The exemption phase-out zones also start at much higher income levels:
- Above $1 million for couples
- $500,000 for singles and heads of households.
Health Care
The requirement that you must have health insurance, qualify for an exemption, or pay a fine is repealed for post-2018 years. Keep in mind that the Obamacare mandate does continue to apply for 2018, however.
Tax Credits
The child tax credit is doubled to $2,000 for each dependent under age 17, with up to $1,406 of the credit refundable to lower-income taxpayers.
The income phase-out thresholds are much higher: AGIs over $400,000 for couples and $200,000 for all other filers. A Social Security number is needed for each child.
There is a new $500 credit for each dependent who is not a qualifying child, including, for example, an elderly parent you take care of or a disabled adult child. This credit is nonrefundable and phases out under the same thresholds as the child credit.
Business Taxes
Regular corporations (“C corporations”) will pay tax at a flat 21% rate, down from the 35% top rate now. This lower rate begins in 2018 and is permanent. Unlike the individual Alternative Minimum Tax, lawmakers killed the corporate AMT altogether. Many individual owners of pass-through entities (“S Corporations” “Partnerships” “Sole Proprietors”) will get a new 20% deduction on Qualified Business Income, but this new deduction is subject to several limitations.
Contact Alron Taxes, Inc. Today!
With all the changes coming from the tax reform, it’s easy to see why taxpayers should have a professional file their taxes. If there is any year to work with a taxation specialist, 2018 is the one! If you have any questions on the details of the new tax laws and how they affect you, we encourage you to give us a call at 321-951-7626 or contact us today. We look forward to working with you this tax season!