Monthly Archives: March 2019

New Medical Deduction

An attempt by Congress to end the medical expense deduction caused an intense reaction because it would have affected people in nursing homes and those with costly chronic diseases. In the end, the deduction was retained and made slightly more generous by lawmakers. They lowered the threshold from 10 percent to 7.5 percent of income […]

Deduction of Miscellaneous Expenses

The tax overhaul also suspended many other deductions or imposed new limits on them while targeting major write-offs such as mortgage interest and state and local taxes. These changes usually expire in late 2025. On Schedule A, a grab bag of items, Congress eliminated deductions for miscellaneous expenses. The change removed deductions for unreimbursed travel, […]

Tax Deductions for Charitable

As a result of the overhaul, the number of tax returns claiming deductions for charitable contributions is expected to fall by more than 50%. For 2018, approximately 15 million filers will take this write-off, compared to approximately 36 million for 2017. The standard 2018 deduction is almost double the 2017 level, rising from $6,350 to […]

Alimony Payments and Recipients

The overhaul made a significant change to the alimony payments tax status. For divorce and separation agreements signed after 2018, payers will not be able to deduct alimony on their tax returns. At the same time, future recipients will no longer be required to report these payments as income, making their tax treatment similar to […]

New AMT

The overhaul almost abolished the alternative minimum tax, or AMT, a complex and unpredictable parallel tax system. The purpose of the AMT is to limit tax breaks that are permitted under the regular tax system and to ensure that high earners can not avoid all taxes legally. Legislators ultimately retained the AMT, but with significant […]

New Kiddie Tax

Significant changes were made to the “Kiddie Tax,” a special levy on the “unearned” income of a child above $2,100 in 2018 and $2,200 in 2019. It typically applies to investment income such as dividends, interest, and capital gains, and is not applicable to the earned income of a young person from newspaper delivery or […]

New Child and Dependent Credits

At the end of the year, the overhaul doubled the maximum child tax credit from $1,000 to $2,000 for each child in a family under the age of 17. This credit is also eligible for many more families. For 2018, it begins to phase out at $400,000 of adjusted gross income for most couples and […]

New Mortgage Interest Deduction

The tax overhaul contains new restrictions, both indirect and direct, on mortgage interest deductions. By the end of 2025, these changes expire. According to IRS, the number of tax returns with a mortgage interest deduction will fall to approximately 14 million in 2018 compared to 32 million in 2017. One reason for the change is […]

Investment Income Taxes

The tax law did not changed the favorable rates for long-term capital gains and many dividends, and there is still a popular zero rate for these types of investment income. For 2018, the zero rate applies to jointly filed married couples who have a taxable income of up to $77,200 ($38,600 for singles). A rate […]

New Standard Deduction

For many people, the most significant changes in the tax overhaul are the almost doubling of the standard deduction and the abrogation of the personal exemption. The standard deduction is the amount filers subtract from income if they do not break deductions for mortgage interest, charitable contributions, state and local taxes and other items in […]