Copyright 2019 - Pfeiffers Accounting & Consulting LLC

In 2018, the mortgage interest deduction limit on qualified acquisition debt is reduced from $1,000,000.00 to $750,000,000.00. This means that interest is deductible to the extent that the loan balances up to $750,000.00 are deductible to buy, build or improve your primary or second home.

For 2018, the state and local taxes deduction will be capped at $10,000.00 (for the sum of state and local property taxes and income taxes). Property taxes paid in carrying on a trade or business will not be subject to this $10,000.00 cap.

  • Doubles estate tax exemption. Estate taxes will apply to fewer people, with the exemption doubled to $11.2 million ($22.4 million for a married couple).
  • Reduces pass-through business taxes. Most owners of pass-through entities such as S corporations, partnerships and sole proprietorships will see their income tax lowered with a new 20 percent income reduction calculation.
  • Cuts some above-the-line deductions. Moving expense deductions get eliminated except for active-duty military personnel, along with alimony deductions beginning in 2019.
  • Weakens the alternative minimum tax (AMT). The bill retains the alternative minimum tax but changes the exemption to $109,400 for joint filers and the phaseout threshold to $1 million. The changes mean the AMT will affect far fewer people than before.
  • Expands use of 529 education savings plans. Tax-deductible contributions to 529 education savings plans can now be used to pay tuition for students in K-12 private schools.
  • Suspension of miscellaneous itemized deductions subject to 2% of AGI. These categories of deductions will no longer be deductible subject to 2% of AGI through December 31, 2025: 1) Unreimbursed employee expenses, 2) Tax preparation fees, 3) Other expenses ie fees to collect interest and divindends, appraisal fees for casualty loss or charitable contributions, excess deductions allowed a beneficiary on termination of an estate

As of 2013, the IRS started limiting itemized deductions depending upon AGI threshold amounts.  The threshold amounts for 2017 are as follows:

 

 Filing Status AGI Threshold (more than)
 Married Filing Joint $311,800.00
 Qualified Widow(er)  $311,800.00
 Head of Household

$287,650.00

 Single  $261,500.00
 Married Filing Separately

 $156,500.00

   

 

 

 

Wages, self employment income, and compensation in excess of certain threshold amounts will be subject to an additional 0.9% Medicare tax in 2012 and on. Note that tips and fringe benefits (wages not paid in cash) are also subject to the additional Medicare tax.

 

Filing Status  Threshold amount
 Married Filing Jointly  $250,000.00
 Married Filing Separately  $125,000.00
 Single  $200,000.00
Head of Household (with qualifying person) $200,000.00
Qualifying Widow(er) with dependent child $200,000.00
   

 

 

 

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