The New Tax Law will decrease taxes for most taxpayers.
However, there is some “fine print” in the New Tax Law, that actually takes away deductions and tax credits that you may be expecting to receive for the coming tax season. Here are a few of the disappearing tax breaks:
- No more write-off for employee business expenses. If you are an employee who pays for tools, mileage, cell phone, or other work-related expenses, you lose those deductions for 2018.
- New 20% deduction disallowed for certain service-based business activities. The new and highly beneficial 20% Qualified Business Income Deduction may be disallowed for certain service-based businesses, if and when your taxable income exceeds certain limitations ($157,500 non-married taxpayer, $315,000 for Married Filing Jointly taxpayers),
- No Social Security Number, no Child Tax Credit. The Child Tax Credit has been doubled to $2,000 per child. Unlike in past years, a child with an Individual Taxpayer Identification Number (ITIN) will not qualify for the credit.
- Can’t claim dependents in other countries. Starting in 2018, the ability for taxpayers to claim dependents in other countries has been curtailed.
- State and local income tax deduction severely limited. IRS now limits the amount of deduction taxpayers can claim for state, local, and real estate taxes paid.
You will still be able to claim credits for education expenses and dependent care expenses.
Secondly, most of you who have itemized deductions in the past will no longer need to itemize. Why? Because the standard deductions for those of us who use any filing status other than Head of Household have doubled, so there may not be a need to itemize anymore. We will see how it goes this coming tax season.
Lastly, if you do not have a business, rental property or need to file taxes for a trust, you may be thinking of doing your own taxes. If so, I support you in that decision. Therefore, I’m adding to my services DYI Tax Filing Assistance, for a small fee of course. Just let me know up front this is what you’d like to do, and we’ll go from there.
Stay tuned for more talk about our upcoming tax changes.