Important changes for 2017 tax year

 

The biggest tax reform law in over 30 years has been signed into law. Much of the law for 2017 stays the same. I have listed a few changes to 2017 that might affect you but most of the changes will come when you file your 2018 tax return -- about a year from now. Because most of the changes don't happen until then, we have some time to learn about the changes and plan for next year.

 

2017 Tax Law Changes

Medical Expense deduction is reduced back to 7.5% for 2017/2018.

 

Integrated Medical Treatment (Alternative Medicine) is now a medical deduction on your Schedule A.

 

Residential Energy Efficient Property Credit or Solar Credit stays at 30% deduction although the credit for energy efficient windows has expired.

 

Qualified Plug-In Electric Drive Vehicle Credit has a maximum of $7500.

 

Bonus Depreciation, effective 9/28/17 will be increased as well as Sec 179 Deduction for business.

 

Car mileage is at $.535; Medical and Charity Mileage is at $.17.

 

Annual Gift Tax Exclusion is $14,000.

 

2018 Tax Law Changes

 

Tax Rate Changes - Both individual and corporate tax rates have changed. The maximum individual tax rate is at 37% and the corporate tax rate is 21%.

 

Standard Deduction Increases - The Standard Deduction will double and in many cases not making it necessary to itemize your deductions on a Schedule A. However, there are NO Personal Exemption deductions allowed.

 

Increased Child Tax Credit and new Dependent Credit - The credit is increased for each child from $2000 (up from $1400 of which is refundable for each child). But there is no exemption credit or deduction for yourself, spouse or dependents.

 

The phaseout thresholds for these credits are drastically increased which means more taxpayers will be able to claim these credits in 2018 and beyond.

 

Disappearing Deductions

 

State income tax and property tax is limited to $10,000 per year.

 

Moving Expenses is eliminated except for certain military.

 

Employee business expenses such as mileage, travel, entertainment, home office, union dues, tax preparation fees, investment fees, etc.

 

Mortgage interest beyond the interest for a mortgage of $750,000

 

No deduction for interest paid on an equity debt.

 


Tax tip: organizing your expenditures by category throughout the year will save time during tax season.

Copyright 2018

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