A message from John:
You’ve probably heard some things about the new tax changes for 2018 but to bring you up to speed on a few items, the standard deductions have doubled so those that don’t itemize will win on that side. For those of you with children, the Child Credits for kids under age 18 (instead 16) are increased but Personal Exemptions have been eliminated so how you benefit is yet to be determined.
Something new that is a major change is if you have a Home Equity loan, the interest will no longer be deductible. If you have one, you may want to look at other options in early 2018.
The SALT deduction which represents taxes on your home (for those you in PA that’s your real estate taxes – school, county and township, sometimes escrowed and paid by your mortgage company) so when you add those and your state and local taxes from your W2, you will get the maximum of $10,000 to write off. So go look at last year’s tax return, flip to Schedule A and look at line 9 and if you are over $10,000 this may apply to you if you are scheduled to make and estimated state tax payment on January 15, 2018 — you need to mail that payment today so that it clears your account by 12/31/17- why, because we can take the deduction without any limitation for 2017 but will be limited in 2018.
Miscellaneous deductions such as employee business expenses (unreimbursed mileage, home office expenses, work supplies purchased out of pocket) are gone after 12/31/17 so if you need to squeeze anything else in, do so before 12/31/17 as these are going away. And for those of you that get car flat vehicle allowances, you may want to negotiate to see if your employer can reimburse you for documented business mileage instead which doesn’t pass through as W2 income.
There are additional changes in the areas of 529 plans and operating businesses so be sure to pay attention to any remarks we include with your completed tax returns this season. Thanks so much for allowing me this opportunity to provide this update.
Attachment: Schedule A Example