GBE Clients,
The Tax Cuts and Jobs Act (TCJA) has several provisions with multiple changes. For example, the standard deduction has increased while at the same time the deduction for exemptions (dependents) has been eliminated entirely.
One area of significant change is within itemized deductions.
As always, this email is a general education tool. For specific instances of how the tax law change may affect you, please schedule a meeting with your GBE advisor.
Itemize No More
With the standard deduction essentially double the previous amount, many of you may no longer be itemizing deductions. Continue to send us ALL of your tax information, as in the past, and we will utilize the strategy to save you the most tax dollars.
Medical Expenses
Still allowed if over 7.5% of AGI (10.0% of AGI starting in 2019).
State and Local Taxes
Deduction limited to $10,000. Previously no limit. This is a significant change! However, great news for farmers, landlords, and business owners – business property and real estate taxes can continue to be deducted without limitation.
Home Equity Loan Interest
HELOC deductions still allowed but only if used for existing home remodel or improvement. Deduction no longer allowed if HELOC used to purchase a car, for example.
Charitable Deductions
Increased allowable amount from 50% to 60% of AGI. A great change for some of our extremely charitable clients! But as a reminder, for those over 70 ½ it is still more beneficial to donate from your IRA through qualified charitable distributions. Contact your advisor for details.
Miscellaneous Deductions
Eliminated. This is a significant change! We are no longer allowed to deduct unreimbursed employee expenses, investment management fees, safe deposit box charges, or tax preparation costs. This may cause major negative tax effects for church workers, transportation industry employees, and anyone else with a large amount of unreimbursed or partially reimbursed mileage.
Tax changes have arrived. The time to begin planning is now.