Halloween and Midterm Elections are Over - What’s Next?
Halloween and the midterm elections are now over. Now we’re focused on pumpkin pies and evergreen wreaths. But, what’s coming after that? Mud season? Why, yes, but it’s also something else: 2018 tax returns to be filed in 2019. Yeah, nobody wants to think about taxes when they can instead focus on chestnuts roasting on an open fire. But it might not be a bad thing to just take a peek at what to expect when you file your 2018 return while you still might be able to do some things before the end of 2018.
As a reminder, there are some changes to income taxes that will likely impact your 2018 return:
- The standard deduction will be higher than in the past. Single filers will have a $12,000 standard deduction while married filing jointly filers will have a $24,000 standard deduction. This will likely reduce the number of taxpayers that itemize their deductions.
- Some reductions in itemized deductions will be present. For example, unreimbursed employee expenses will be eliminated. The amount of combined state income tax, sales tax, local tax, and property tax that can be deducted will be capped at $10,000, which can take a bit of a bite in states with high property tax rates. There will be an elimination of dependent and personal exemptions.
- The amount of mortgage interest that can be deducted for new home purchases will be impacted. The cap on mortgage indebtedness was reduced to $750,000 down from $1 million.
- Some will see a reduction in taxes owed through tax credits, which are a direct reduction in the taxes owed. The child tax credit will double to $2,000. There is a new, non-refundable credit of $500 for dependents other than children. The phase-out limit for a married couple has been raised to $400,000 from $110,000 so more are eligible for these credits.
- People who are self-employed, have a partnership, or an S Corp may have reduced tax liability due to a 20% qualified business income deduction for certain types of “pass through” entities. An increase in the amount that small businesses can expense for the purchase of business equipment may also be helpful.
Now may be a good time to consult a qualified tax professional such as an accountant or tax attorney to see how your tax return might be impacted and whether updating your w-4 or estimated tax payments makes sense going forward. There is a little bit of time left in the year as well for considering things like tax loss harvesting in relation to investments.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
I am pleased to help you, your family members, friends, and colleagues and offer a complimentary first consultation.
Todd A. Slingerland, CFP®
6 Tower Place Albany, NY 12203
(518) 867-4000 x105 [email protected] www.capitalfinancialplanning.net