Most people are aware that when the tax reform bill came into law (the Tax Jobs and Cuts Act of 2017) a lot of changes were on the horizon. However, many are still largely unaware of the specifics regarding those changes and how they will impact both individuals and corporations. As the tax-related provisions were announced by the Internal Revenue Services (IRS), taxpayers across the country began to look internally as to how these changes would affect their wallets. Many business owners depend on deductions to reduce their taxable income. As such, when it was announced that many of these deductions are no longer in play, eyebrows were raised and questions ensued.
It is important to note that the changes to the deductions will take effect for the 2018 tax year and may last for the foreseeable future, as many of the provisions in the tax law expire in 2025. Since the changes apply to the 2018 tax year, they will be used when preparing the 2018 tax returns in 2019. The following are 10 of the tax deductions disappearing this year:
- Tax preparation fees
- Moving expenses (active duty members of the Armed Forces moving due to military order can still deduct)
- Standard deductions at $6,350 (as they will nearly double for the 2018 tax year)
- $1 million mortgage interest deduction
- Alimony deduction
- Unlimited deductions for state and local tax (SALT)
- Various itemized deductions
- Limitless home equity loan interest deduction
- Unreimbursed job expenses
- Personal exemptions
From new tax brackets to corporate tax changes and from eliminated deductions to modified credits, the United States has seen some truly significant tax changes. The new laws make itemizing deductions highly unlikely, which can be good for some taxpayers and bad for others. Regardless, both individuals and corporations must be acutely aware of how the tax reform will impact their finances.
At Ellrich, Neal, Smith & Stohlman, P.A., our tax planning service goes far beyond filing a tax return. We assist new businesses with basic ownership options and tax consequences and guide growing businesses through year-end planning and projections. We offer a broad range of consulting services that include evaluating material transactions, mergers and acquisitions, international taxation strategies, and estate and trust planning. Contact our Palm Beach Gardens or Miami office today to learn more about our tax services.