www.qns.com I LIC COURIER I JULY 2019 35
TAX TIPS
TAX REFORM
2019
BY JOHN SAVIGNANO, CPA
As the 2019 tax deadline approaches, many Americans will feel the impact of last year’s tax
reform for the rst time. It was the most sweeping rewrite of the tax code in more than three
decades, aer all.
Of importance to most tax lers is the fact that the new tax law altered the federal income
tax brackets, doubled the standard deduction and changed many other tax credits and
deductions.
e bill, originally known as e Tax Cuts and Jobs Act, didn’t have an easy journey. It
was rst introduced in the House of Representatives in November 2017 and was signed into
law by President Donald Trump on Dec. 22, 2017 aer vigorous debate and multiple
versions of the bill made their way through both the House and Senate.
With all the developments since then, you may have forgotten about these sweeping tax
changes until now. But as you get ready to le your tax return this year, you should prepare
for some of the changes that could aect you.
AFFORDABLE CARE ACT
e individual mandate is out.
Starting Jan. 1, 2019, consumers who do not purchase health insurance will no longer face
penalties.
GOP lawmakers argue that the measure will decrease spending on the tax subsidies it
oers to balance out the cost of premiums for millions of Obamacare enrollees.
However, without the mandate, experts caution that fewer healthy and young people will
sign up for health coverage through the insurance marketplace, which will likely lead to
increases in premium costs for those who remain the marketplace and could even induce
some insurers to drop out of the market altogether. It’s a big blow to supporters of the
long-embattled health care law.
CHILD TAX CREDIT
e child tax credit doubles to $2,000 per qualifying child. Up to $1,400 of the child tax
credit can be received as refundable credit (meaning it can go toward a tax refund). e new
rule also includes a $500 nonrefundable credit per dependent other than a qualifying child.
e credit begins to phase out at an AGI over $200,000 — for married couples, the
phase-out starts at an AGI over $400,000.
is rule is in eect through 2025.
CORPORATE TAXES
Permanently cuts the top corporate tax rate to 21 percent.
ESTATE TAXES
Doubles the exemption for the estate tax. Now, estates up to $11.2 million are exempt
from the tax.
GAINS MADE ON HOME SALES
Homeowners can still exclude gains up to $250,000 (or $500,000 if married ling jointly)
when they sell their primary residence, but they have to have lived there longer. People who
sell their homes aer Dec. 31, 2017 now have to use the home as their primary residence for
ve of the eight years before the sale in order to claim the exclusion. It can only be claimed
once in a ve-year period.
e new rule expires on Dec. 31, 2025.
MEDICAL EXPENSES
e threshold for all taxpayers to claim an itemized deduction for medical expenses is
lowered to 7.5 percent of a ler’s adjusted gross income.
e change applies to taxable years from Dec. 31, 2016 to Jan. 1, 2019.
MISCELLANEOUS TAX DEDUCTIONS
Tax preparation: Taxpayers may not claim tax-preparation expenses as an itemized
deduction through 2025.
Work-related expenses:e bill suspends work-related expenses as an itemized deduction
through 2025.
Investment fees:Under the new rules, the investment fee deduction is suspended until
2025.
MORTGAGE AND HOME EQUITY LOAN INTEREST DEDUCTION
New homeowners can include mortgage interest paid on up to $750,000 of principal value
on a new home in their itemized deductions.
e old $1 million caps continues to apply to current homeowners (those who took out
their mortgages on or before Dec. 15, 2017), as well as renancing on mortgages taken out
on or before Dec. 15, 2017, as long as new mortgage amount does not exceed the amount of
debt being renanced.
Homeowners CANdeduct interest paid on a home equity line of credit or home equity
loan, so long as the loan was used to buy, build or substantially improve your home.
ese changes are set to expire aer 2025.
MOVING EXPENSE
e new tax bill suspends the moving expense deduction through 2025. Until then,
taxpayers are not permitted to deduct moving expenses.
Moving-related deductions and exclusions remain in place for members of the military
STANDARD DEDUCTIONS
Standard deductions for all nearly double under the new rules.
Individuals see standard deductions rise to $12,000; for heads of household, it rises to
$18,000; and for married couples ling jointly the standard deduction increases to $24,000.
John Savignano is a partner with Savignano Accountants & Advisors located at 47-46
Vernon Blvd., Second Floor, in Long Island City. If you have any questions or require
additional information, please call John at 718-707-0955.
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