Al’s column: Tax breaks—What you need to know

Home Columns Al's Column Al's column: Tax breaks—What you need to know

April 16/23, 2018: Volume 33, Issue 22

By Bart Basi

 

If you’ve managed to secure an extension to file your 2017 taxes, there are some things you need to know. If you thought the Tax Cuts and Jobs Act (TCJA) signed into law Dec. 22, 2017, was the final determination on tax matters for the future, you were wrong. Earlier this year, Congress approved the Bipartisan Budget Act, which contains a number of tax provisions and extensions of more than 30 expired tax breaks. While the majority of tax relief in the legislation applies only to the 2017 tax year, the retroactive changes will have a large impact on the current filing season.

Additionally, a number of new provisions within the Bipartisan Budget Act modified provisions passed under the TCJA. The modifications include new mandated tax forms for seniors filing taxes as well as excise taxes on investment income regarding private colleges and tuition. The IRS has recognized the extensions and modifications will have a direct impact this filing season.

With more than 30 extensions to previously expired tax breaks, it’s important that business owners as well as individual filers work with a knowledgeable professional to minimize tax liabilities. The TCJA is essentially 500-plus pages of dense tax and accounting material; the Bipartisan Budget Act is another 650-plus pages of legalese. Understanding the material can be confusing. However, it’s vital to take advantage of what is offered by the IRS to maximize your dollars by minimizing your tax liabilities.

New game, new rules
December 2017 marked the beginning of a new tax era. The TCJA, as the Trump Administration has so often stated, is the first major tax reform since the 1980s. Many businesses are aware of major corporate tax changes, but the TCJA may also change the way individuals file their taxes, not only this year but through 2025.

One major aspect of the new tax law is an allowance for pass-through entities to claim a 20% “below-the-line” deduction for the owner’s qualified business income. However, the 20% deduction is subject to limitations that are currently being interpreted as to their application. The TCJA has labeled a “specified service trade or business involving the performance of services in the fields of health, law, consulting, athletics, financial services and brokerage services” as services that don’t qualify for the 20% deduction.

Here are some other examples of how the new TCJA may affect you:

Home mortgage interest. This is a frequently used deduction that allows filers to deduct the amount of interest paid on their mortgage. After the TCJA changes, the deduction is now limited to claiming the home mortgage interest only for interest paid or accrued on the acquisition debt during those years.

Alimony/separate maintenance. Previously, anyone who paid alimony or separate maintenance payments were allowed to claim them on their federal taxes and were allowed a deduction.  This deduction has been repealed.

Moving expenses. Everyone moves at some point in their life, typically many times. For the years 2018-2025, the above-the-line tax deduction for this item has been repealed. However, special rules apply for those in the United States Military.

These are just a few of the changes under the new tax code. Contact the Center for Financial, Legal & Tax Planning at 618.997.3436, or via email at melissa@taxplanning.com, for clarification or to schedule a consultation.

Bart Basi is an attorney, a certified public accountant and the president of the Center for Financial, Legal & Tax Planning. He is an in-demand speaker and writer on financial issues impacting various businesses and industries.

Must Read

Välinge commits to FSC certification

Viken, Sweden—Välinge Innovation has shared new information about its sustainability mission and its FSC-certified Välinge Flooring products. Välinge said the FSC certification was a...

Unilin introduces pressed bevel technology

Waregem, Belgium— Unilin Technologies introduced its patented pressed bevel technology for resilient flooring to its continuously growing licensing base. With the new technology, the edges...

Carpet Design Awards finalists selected

Hannover, Germany—An international jury of design and carpet industry experts have selected finalists for the Carpet Design Awards 2021. Domotex said 27 finalists reached the...

Pergo Extreme to sponsor virtual summit

Calhoun, Ga.—Pergo Extreme will sponsor Country Living and Good Housekeeping’s virtual Makeover Takeover Renovation Summit, Mohawk said. During the free summit from Wed., May...

Marazzi launches Marble Obsession

Dallas, Texas—Marazzi launched its Marble Obsession porcelain and ceramic tile collection. The new collection is a marble-look assortment featuring an array of three marble...

Natural Stone Institute opens award entries

Oberlin, Ohio—The 2021 entry period for the Natural Stone Institute Awards Program is now open. The association said it opened entries for the Pinnacle...
Some text some message..
X