The Balancing Act of the Tax Cuts and Jobs Act
Everything related to taxes tries to even out. What is a deduction to one person, is typically income to another. For example, when I contract work I issue a 1099-MISC to the contractor. This is a business deduction for me, and the contractor will report the 1099-MISC as income to them. Examples of this type of balancing act can be seen in the new Tax Cuts and Jobs Act (TCJA) that is in effect for 2018.
TCJA lowers tax bracket rates, allows for higher standard deductions, and higher child tax credits for families with minor children. These all result in more money in our pockets. However, to compensate for this there needs to be the evening out portion. So, what are we losing in 2018? Here are the top 7:
- No more personal exemptions. Say goodbye to the $4,050 per claimed person exemption in 2018.
- Mortgage interest on purchase loans is still deductible under tax reform up to $750,000, but the deduction for interest on home equity loans is nondeductible in 2018.
- Moving expenses are no longer allowed. So if you are planning to move more than 50 miles for a new job, don’t expect a deduction like in previous years.
- Casualty and Theft losses are no longer available in 2018. However, you may claim related expenses if there is a presidentially declared natural disaster in your area.
- Unreimbursed employee expenses are out – try to get your employer to pay for these expenses as much as you can.
- Subsidized parking is a thing of the past. Employees were eligible under old tax law to get up to $255 per month from their employers to subsidize parking costs or transit passes. Workers didn’t have to include those perks in income, and companies could deduct it. Now, the corporate deduction for that cost will go away, and that could lead some businesses to stop offering those programs to workers.
- Tax preparation fees are no longer an allowable deduction.
Please contact us at www.TaxationDefense.com or 727-230-0333 to discuss how TCJA impacts you directly.