Tax Reform Bill Changes Many Deductions

1/18/2019

Editor’s note: This post is brought to you by INB’s tax services in conjunction with Dave Ramsey, a personal money-management expert and popular national radio personality. INB Senior Vice President Chris Parks, CPA, is the Dave Ramsey-endorsed local provider for tax services in the Springfield area. Schedule an appointment today with Chris by calling 217-679-1676.

Chris Parks, Dave Ramsey

The 2018 tax reform bill—formally known as the “Tax Cuts and Jobs Act”—was introduced a full year ago, but it didn’t apply to the taxes you filed last year.

When you file this April, however, you’ll notice the difference, and we’re here to help you navigate those changes. Some of the biggest changes can be found in differences in the income brackets and marginal tax rates, as well as new standard deductions and mortgage deductions

Here are some other ways that the tax reform bill may impact you for 2019…

 

The Estate Tax Exemption

Estate tax is a tax you pay on inherited money and property. In the new tax reform bill, you can now inherit a total of $11.2 million in money and property in your lifetime before you are hit with the 40% estate tax (increased from $5.49 million).

 

Charitable Donations

In 2017, you could deduct up to half of your income in qualified charitable donations if you itemized your deductions. The new tax reform bill has increased that limit to 60% of your income.

 

SALT Deductions

SALT stands for “state and local taxes,” and in the past, there was no limit on the deduction of state and local taxes. The new tax reform bill keeps the SALT deduction but limits the total deductible amount to $10,000, including income, sales and property taxes.

 

Medical Expenses

Before the new tax reform bill, you could deduct unreimbursed medical expenses above 10% of your adjusted gross income (which is your total income minus other deductions you have already taken). The new tax reform bill has reduced that hurdle to 7.5% of your adjusted gross income, which means you can deduct more.


Child Tax Credit

The 2018 tax reform bill increases the child tax credit to $2,000 per qualified child and raises the income limits for the credit to $400,000 jointly and $200,000 individually. There are also changes regarding 529 college plans. Read more here


Disappearing Deductions Include:

  • Casualty and theft losses (except those attributable to a federally declared disaster)
  • Unreimbursed employee expenses
  • Tax preparation expenses
  • Moving expenses
  • Employer-subsidized parking and transportation reimbursement
  • Miscellaneous work expenses, like travel or meals with clients

Filing your taxes doesn’t have to feel overwhelming with the help of experienced professionals. Contact INB’s expert tax team and schedule an appointment by calling Chris Parks at 217-679-1676.

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