2018 Tax Reform Info and Updates

Effective January 1, 2018, here are a few highlights of the new tax bill:

1. The bill keeps deductions for charitable contributions, property taxes, mortgage interest, and retirement savings. It limits the deduction on mortgage interest to the first $750,000 of the loan.
2. State Taxpayers can deduct up to $10,000 in state and local taxes. They must choose between property taxes and income or sales taxes.
3. Those paying alimony will lose their deduction, but those receiving alimony will no longer be taxed on the income. This change begins in 2019 for divorces signed in 2018.
4. Interest on home equity lines of credit can no longer be deducted. Current mortgage-holders aren’t affected.
5. It allows taxpayers to deduct medical expenses that are 7.5 percent or more of income.
6. It doubles the standard deduction for everyone. A single filer’s deduction increases from $6,350 to $12,000. The deduction for Married and Joint Filers increases from $12,700 to $24,000
7. The bill repeals the Obamacare tax on those without health insurance.
8. It eliminates personal exemptions. Taxpayers currently subtract $4,150 from income for each person claimed.
9. The bill doubles the estate tax exemption to $11.2 million for singles and $22.4 million for couples.
10. It keeps the Alternative Minimum Tax. It increases the exemption from $54,300 to $70,300 for singles and from $84,500 to $109,400 for joint
11. The bill doubles the estate tax exemption to $11.2 million for singles and $22.4 million for couples.
12. It lowers the maximum corporate tax rate from 35 percent to 21 percent.  Clients who are sole proprietors (Schedule C) may consider forming an entity in 2018. Laguna Legal can help you set up your new Corporation or LLC.

Here is an article that talks about what you can do before year end.  Please note that this move may not benefit you if you have been subject to Alternative Minimum Tax (AMT) in the past and may be in the AMT situation for 2017 as well. Click here

Here’s also a link that explains what AMT means. Click here

If you have questions regarding the new tax bill or need a referral to an accountant that is familiar with the new changes, we work closely with Masler & Associates, CPA’s  their contact information is below:

Sharon T. Masler
Masler & Associates, CPAs
16485 Laguna Canyon Road, Suite 230
Irvine, California 92618
T 949-857-0404 / F 949-266-8019
sharon@maslercpa.com
www.maslercpa.com