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

HomeColumnsAl's ColumnAl'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

Year-over-year gains for single-family built-for-rent starts

Washington, D.C.—Single-family built-for-rent construction posted year-over-year gains as of the first quarter of 2024, as builders sought to add additional rental housing in a...

New home sales down in April

Washington, D.C.—Mortgage rates that averaged above 7% since mid-April—per Freddie Mac data—acted as a drag on new home sales in April, according to the...

NAFCD welcomes Michael Wilbur as new executive director

New Orleans, La.—The North American Association of Floor Covering Distributors (NAFCD) has appointed Michael Wilbur as the incoming executive director, effective July 1—at which...

Tarkett, Mycocycle begin construction waste decomposition project

Washington, D.C.—Tarkett, through a partnership with Mycocycle, is working to help decompose and recycle construction waste via mycelium. Tarkett was first introduced to Mycocycle at...

Starnet awards: Commercial projects exhibit creativity, craftsmanship

The Starnet Design Awards celebrate outstanding commercial flooring design in corporate, healthcare, education, hospitality, multifamily, government and retail facilities. The diverse categories allow designers...

WFCA appoints two new board directors

Dalton—The World Floor Covering Association (WFCA) has appointed two industry leaders to its board of directors: Doug Jackson, CEO of Cali Bamboo; and Dani...
Some text some message..
X