Tax Reform Changes That You May Not Be Aware Of

January 22nd, 2019 at 6:01 PM

Alimony Payments

For divorce agreements executed or modified after December 31, 2018, alimony is tax-free to the recipient and no longer tax deductible for the payor.

199A Deduction

Sole Proprietorships, partnerships, and S Corporations may be eligible for the new 20% deduction of qualified business income

Itemized Miscellaneous Deductions

Itemized miscellaneous deductions are no longer deductible. If you are a W-2 employee, your unreimbursed business deductions are gone.

Home Mortgage Interest

For tax years 2018 through 2025:

1. You can deduct interest payments up to 750,000 in acquisition debt for home purchased after 12/31/17

2. You can deduct up to $100,000 of home equity interest, only if funds are used for to buy, build, or substantially improve the home.

Gambling Losses

The business expenses of professional gamblers are no longer deductible, and there is no longer any allowance for business expenses creating a loss.

Employee Meals

Now, only 50% deductible.

Section 179 Expensing

The maximum deduction for qualifying property is $1 Million. The dollar for dollar phase-out begins at 2.5 million. Qualifying assets include new and used assets, as in prior year.

Vehicle Deductions

Bonus depreciation as 100%—prior law was 50%. Luxury auto limits begin at $50,000—prior law 40,000.

State Tax Deduction

State Tax Deduction on Schedule A are capped at $10,000.

Mark S. Fineberg, CPA