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WHITEWOOD & ASSOCIATES

 

 

PROVIDING QUALITY TAX & BUSINESS SERVICES

August 2018 - Dear client,

Below is a brief overview of the new 2018 tax law as it pertains to individuals. 

I have concerns about whether everyone's tax withholding will sufficiently cover their 2018 tax liability. The IRS assumed everyone would benefit from the new tax law when in fact many will pay more. In February the IRS lowered the federal withholding brackets to accommodate that perceived benefit. If you are one of the taxpayers who will not benefit from the new tax law you might be greatly under-withheld, which could result in a significant tax bill for you in spring of 2019.

If you would like me to verify your withholding and do a quick analysis now, you can send me your current check stubs by e-mail, or set up a 15 minute phone appointment. My fee will be $100 for this service.

Thank you and enjoy the rest of your Summer!

Marlene deBoisblanc E.A., ATA, ATP, NTPI Fellow

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Tax Reform and What it Means for Your Personal Taxes:

President Trump, when he was on the campaign trail, promised that he would push for tax reform legislation. On Dec, 22, 2017, he signed The Tax Cuts and Jobs Act into law, the first major tax reform in 31 years. The new law makes many changes to the tax code. Every taxpayer is impacted. A highlight of the changes follows:

Tax rates. Tax rates are reduced. The top rate is reduced from 39.6% to 37%. Lower rates are also reduced.

Exemptions and the child tax credit. The deduction for personal exemptions is eliminated. An expanded child tax credit will help make up for the loss of personal exemptions for some families. The credit is increased to $2,000 (from $1,000) for qualifying children under 17. For children 17 and older Cand for other dependents, the credit is $500.

Standard deduction. The new tax reform law doubles the standard deduction. The higher standard deduction ($12,000 for singles, $18,000 for heads of household, and $24,000 for married filing joint) means that fewer taxpayers will benefit from itemizing deductions.

Itemized deductions. Itemized deductions for all state and local taxes, including property taxes, are capped at $10,000. The limit on mortgage debt for purposes of the mortgage interest deduction is reduced from $1,000,000 to $750,000 for loans made after Dec. 15, 2017. Loans made before Dec. 15, 2017 are grandfathered at the $1,000,000 debt limit. The interest on home equity borrowing is no longer deductible. The threshold for medical expense deductions is lowered to 7.5% of adjusted gross income (from 10%) for tax years 2017 and 2018. Miscellaneous itemized deductions subject to the 2% of AGI limitation are not allowed. Miscellaneous itemized deductions lost because of the new law include employee business expenses, investment adviser fees, union dues, and tax preparation fees. Personal casualty losses are not allowed unless the losses were suffered in a federally declared disaster area.

Alimony. The new tax reform law eliminates the alimony deduction for agreements signed after Dec. 31, 2018. Alimony income is not taxable for agreements signed after Dec. 31. 2018. There is no change to the law for agreements signed before Jan. 1, 2019.

Moving expenses. The new tax reform law eliminates the moving expense deduction and makes employer reimbursement of moving expenses taxable to the employee beginning in 2018.

AMT. The new tax reform law temporarily increases the alternative minimum tax (AMT) exemption for tax years 2018 through 2025. The increase in the exemption, as well as the elimination of major tax preferences (exemptions, state taxes above $10,000 and miscellaneous itemized deductions), means that fewer people will be subject to AMT under the new law.

Education. The new tax reform law modifies qualified tuition programs - §529 plans. Funds in the 529 plan can now be used to pay for grades K to 12 private school tuition. The above-the-line deduction for college tuition expenses was renewed in later legislation, but only for 2017. The American Opportunity and the Lifetime Learning credits continue to be available.

Roth IRA conversions. The new tax reform law repeals the special rule permitting recharacterization of Roth IRA conversions. A conversion of a traditional IRA to a Roth IRA may still be advisable, but once the conversion is completed, it can’t be undone.

These are just a few of the changes included in the Tax Cuts and Jobs Act. Your 2018 taxes will be affected. That’s guaranteed by the scope of the changes. The degree of impact depends on your personal situation.

 

We Are Committed to Helping You Minimize Your Anxiety and Tax Burden

Whitewood & Associates is a professional tax and accounting firm. Our clients’ financial health and peace-of-mind are our priority. We believe the best way to achieve this is through careful planning, knowledge, and appropriate application of all relevant tax codes. We seek to partner with small business entrepreneurs (the risk-takers) to help empower them as the creators of value in our local and national economy.

Marlene deBoisblanc previously worked as a principal staff accountant at one of the largest tax firms in the Conejo Valley and has been practicing in the finance and tax industry since 1979. She works hard to sustain strong relationships and provide ongoing services that strengthen her clients’ financial success.

In addition to providing you with a profile of our firm and the services we provide, this website has been designed to become a helpful resource tool to you, our valued clients and visitors. As you browse through our website, you will see that we have highlighted background information on our firm and the services we provide. We have also included useful resources such as informative articles (in our Newsletters section) and interactive financial calculators (in our Financial Tools section). In addition, we have taken the time to gather many links to external websites that we think would be of interest to our clients and visitors (in our Links section).

Please feel free to contact us with any questions or comments you may have about your tax situation or the new tax laws.

 

Whitewood & Associates, Whitewood & Associates, Whitewood & Associates, Whitewood & Associates,

Whitewood & Associates, Whitewood & Associates, Whitewood & Associates, Whitewood & Associates,

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